U.S. employers added only 74,000 workers to payrolls in December, the Labor Department reported Friday. That figure comes in well below economists' expectations, which had been at around 200,000, according to Bloomberg. It is also the fewest jobs added in one month since January 2011.
Meanwhile, the jobless rate fell from 7.0 percent to 6.7 percent. The jobless rate posted its largest fall since September 2012 and is at its lowest point since October 2008, but it doesn't entirely reflect an improving labor market. Though nearly 500,000 fewer people were unemployed in December than in November, the declining rate also reflects that many Americans stopped looking for work.
People have to be actively looking for work to count as unemployed or being in the labor force. Last month, the labor force participation rate – the share of Americans actively looking for work or working – fell by 0.2 percentage points, from 63 percent to 62.8 percent. That's 0.8 percentage points lower than one year ago.
Indeed, while the unemployment rate fell by 0.3 percentage points in December, the share of the population that is employed held steady at 58.6 percent. In addition, the U-6 unemployment rate, an alternative measure that includes people who have stopped looking for work and those who are working part time for economic reasons, held steady at 13.1 percent.
Among the industries adding the most jobs in December were retail, with 55,300 new jobs, and temporary help services, with 40,400. Meanwhile, government lost 13,000 jobs and construction lost 16,000, which may signal a slowdown in the housing market.
This jobs report comes as the Federal Reserve starts to taper its monthly bond purchase program known as QE3 from $85 billion a month to $75 billion per month. The central bank closely monitors labor market data in determining what to do with its stimulus program, and a weaker-than-expected report may cause central bankers to decide to slow that taper.
The report also coincides with a heated fight on Capitol Hill over ending extended federal unemployment benefits for the long-term unemployed. The latest jobs report shows that 37.7 percent of all unemployed Americans have been unemployed for 27 weeks or more, and a majority – 53.7 percent – has been jobless for 15 weeks or more. Currently, the average duration of unemployment in the U.S. is 37.1 weeks, a figure that remains very elevated; throughout the early and mid-2000s, the figure generally remained below 20 weeks.