[QODLink]
Americas
Weak job market plagues US economy
New US jobless figures suggest that while the unemployment rate has dropped, the economy is still in for tough times.
Last Modified: 07 Jan 2011 19:07 GMT

US employers hired far fewer workers than expected in December, showing the world's biggest economy was still struggling to gain momentum, despite the unemployment rate dropping to a more than 18-month low.

Unemployment fell to 9.4 per cent, the lowest since May 2009, on Friday down from 9.8 per cent in November. But part of the decrease was due to jobless giving up the search for work.

The disappointing jobs growth figure reported by the US labour department suggested the federal reserve would likely stay the course with its effort to support the economy with the purchase of $600bn in government bonds.

Non-farm payrolls increased 103,000, below economists' expectations of 175,000. Private hiring rose 113,000, while government employment fell 10,000.

Overall employment for October and November was revised to show 70,000 more job gains than previously reported, with temporary hiring, seen as a harbinger of permanent employment, increasing 15,900 after 31,100 in November.

Also, the service sector is growing at its fastest pace in more than four years.

'Accelerate hiring'

Barack Obama, US president, said the report shows a trend in the right direction even though the numbers are fluctuating and hiring and growth must still accelerate. 

"Our mission has to be to accelerate hiring and accelerate growth," Obama said during remarks at a window manufacturing plant in suburban Maryland on Friday.

"That depends on making our economy more competitive."

The labour department report was released one day after Obama appointed William Daley as his new chief of staff.

Obama said that the Williams, a former commerce secretary, has a "deep understanding of how jobs are created".

Although the labour market recovery remains very slow, the broader economy is showing signs of strengthening, with data on consumer spending and manufacturing improving.

Those upbeat figures had led to calls for the US central bank to scale back its widely criticised government bond-purchasing programme, which is aimed at keeping interest rates low to boost demand.

'Reluctant employers'

Ben Bernanke, US federal reserve chairman, sketched a more optimistic outlook for the US economy, but said the bond-buying programme is needed because it will take up to five more years to bring
unemployment back to healthy levels.

He told the senate budget committee that there is increasing evidence that a "self-sustaining" recovery is taking hold. He said he expects stronger economic growth because consumers and businesses will boost spending this year.

However, there are risks - namely a weak job market.

"Notwithstanding these hopeful signs ... employers reportedly still reluctant to add to payrolls, considerable time likely will be required before the unemployment rate has returned to a more normal level," said Bernanke.

"Persistently high unemployment, by damping household income and confidence could threaten the strength and sustainability of the recovery."

Source:
Agencies
Topics in this article
People
Country
Organisation
Featured on Al Jazeera
Your chance to be an investigative journalist in Al Jazeera’s new interactive game.
An innovative rehabilitation programme offers Danish fighters in Syria an escape route and help without prosecution.
Street tension between radical Muslims and Holland's hard right rises, as Islamic State anxiety grows.
Take an immersive look at the challenges facing the war-torn country as US troops begin their withdrawal.
Featured
Led by students concerned for their future with 'nothing to lose', it remains to be seen who will blink first.
Taipei has sided with Hong Kong's pro-democracy protesters as relations with Beijing continue downward spiral.
Some say they've 'lost everything' after a toxic spill in August, which was followed by leaks caused by heavy rain.
Many orphanages ignore government orders or operate under the radar, and there are only four inspectors nationwide.
Palestinian citizens of Israel are blocked from living in Jewish communities for lacking 'Zionist vision'.