5 Jan 2013

US jobless rate remains at 7.8%

10:46 pm on 5 January 2013

The US economy added a further 155,000 jobs in December, while the unemployment rate held steady at 7.8%, official figures show.

The jobs came mainly in the healthcare, manufacturing, construction and food services sectors, the Labor Department said.

The public sector shed 13,000 jobs, mainly at the local level, but this was more than offset by the private sector, the BBC reports.

Separate figures suggested a sharp rise in activity in the US service sector.

The Institute of Supply Management said its service index rose to 56.1 in December, from 54.7 the previous month. Any reading above 50 suggests expansion.

The December reading was the highest since February and was stronger than analysts had expected.

The total number of unemployed in the US in December was largely unchanged at 12.2 million.

The unemployment rate for November was revised up from 7.7% to 7.8%, the department added.

Cash will last two months

These are the first figures since a short-term deal to stave off the US "fiscal cliff" was reached earlier this week.

If a deal had not been agreed, spending cuts and tax rises worth $US600 billion would have kicked in. These could have thrown the US back into recession and sent the unemployment rate shooting upwards.

Still, the deal has only postponed by two months negotiations over spending cuts and the government debt ceiling - a legal cap on its total borrowing set by Congress. If this cap is not raised, the US is set to run out of money by February.

The December new jobs figure was only slightly above the average 153,000 jobs created per month in both 2012 and 2011.

The US economy needs to add about 90,000 jobs a month to keep up with population growth.

"While a 150,000-170,000 per month trend in payrolls is far from booming, it is strong enough over time to keep the unemployment rate moving down," said Jim O'Sullivan at High Frequency Economics.

Analysts expect many of the 30,000 new construction jobs - the sector's best performance in 15 months - to reflect rebuilding in the north-east of the US following the damage inflicted by Storm Sandy in October.