US jobless rate falls as hiring tops forecasts

WASHINGTON // US employers in December added more workers to payrolls than forecast, and the jobless rate fell to an almost three- year low, showing that the labour market had gained momentum heading into the new year.

The increase of 200,000 followed a revised 100,000 rise in November that was smaller than first estimated, labour department figures showed. The median projection in a Bloomberg News survey called for a December gain of 155,000. The unemployment rate unexpectedly fell to 8.5 per cent, the lowest since February 2009, while hours worked and earnings climbed.

Sustained payroll gains are needed to chip away at joblessness and support household spending, which accounts for about 70 per cent of the world’s largest economy. The labour market figures follow recent data showing increased manufacturing and a rebound in consumer sentiment that indicate the US is weathering Europe’s debt crisis.

“You got the trifecta – more people working, wages up and the average work week up,” said Stuart Hoffman, the chief economist at PNC Financial Services Group in Pittsburgh, who accurately forecast the December payrolls gain. “You can’t really argue that that isn’t a sign of significant improvement.”

Stock-index futures held gains after the report, with the contract on the Standard & Poor’s 500 Index expiring in March climbing 0.2 per cent to 1,275.5 just after the opening in New York. The yield on the benchmark 10-year Treasury note fell to 1.97 per cent from 2 per cent late on Thursday.

Employers added 1.64 million workers last year, the best year for the American worker since 2006, after a 940,000 increase in 2010. Even with the gains, little headway has been made in recovering the 8.75 million jobs lost as a result of the recession that ended in June 2009.

“The tide is beginning to come back in,” James Glassman, a senior economist at Jpmorgan Chase & Co in New York, said in an interview with Tom Keene and Ken Prewitt.

“We’ve got a long way to go. This is all positive, though, that we’re actually moving forward, and that’s an important trend.” Bloomberg survey estimates of 86 economists for last month ranged from increases of 80,000 to 220,000. The unemployment rate, derived from a separate survey of households, was forecast to climb to 8.7 per cent, according to the survey median. The fall in the jobless rate from a revised 8.7 per cent in November reflected a decline in unemployment combined with a gain in Americans saying they were employed.