US employers kept their pace of hiring virtually steady last month, falling short of the levels needed to bring down the country’s lofty unemployment rate and pointing to lackluster economic growth this year.
Other data on Friday gave stronger signs of growth, with the US service sector activity expanding the most in 10 months.
Payrolls outside the farming sector grew 155,000 last month, the US Department of Labor said. That was in line with analysts’ expectations and slightly below the revised gain of 161,000 reported for November.
The jobless rate was steady at 7.8 percent. The report reinforces expectations of 2 percent economic growth this year, which is unlikely to quickly bring down the unemployment rate.
It is also means the US Federal Reserve may think twice before altering its “easy-money policies” anytime soon despite growing unease by some policymakers over a bond-buying program.
“The US economy is just muddling through,” Navigate Advisors managing director Tom di Galoma said.
The US Department of Labor raised its estimate for the unemployment rate in November by a tenth of a point to 7.8 percent, citing a slight change in the labor market’s seasonal swings.
Most economists expect the US economy will be held back by tax hikes this year as well as by weak spending by households and businesses, which are still trying to reduce their debt burdens.
Friday’s data nonetheless gave signals of some momentum in the labor market’s recovery from the 2007 to 2009 recession.
Gains in employment were distributed broadly throughout the economy, from manufacturing and construction to health care.
Also, many economists had expected last month’s payroll gains to be padded by one-time factors such as the recovery from a mammoth storm that hit the east coast of the US in October.
The government had said last month the storm had no substantial impact on the November data, and many economists expected the government on Friday to recant by revising downward payroll gains in November.
Instead, the government revised November payrolls upward by 15,000.
Average hourly earnings rose 0.3 percent last month, slightly more than analysts had expected, while the length of the average working week edged higher.
“This shows the economy is chugging along, with payroll gains at about the average it has been over the past year,” RBC Capital Markets economist Tom Porcelli said.
Separately, the Institute for Supply Management said its services index rose to 56.1 last month, the highest since February last year.
Some analysts said the pace of hiring remains too weak for the Federal Reserve to consider scaling back its plans to buy bonds. The US central bank has said it wants substantial improvement in the employment outlook before taking its foot off the accelerator.
“There is nothing here to suggest the Fed will see indications of a ‘substantial’ improvement,” said Julia Coronado, chief North America economist at BNP Paribas in New York.
However, Craig Dismuke, a strategist at Vining Sparks in Memphis, Tennessee, said the current pace of job creation will raise pressure on the Fed to stop bond purchases after the middle of the year.
The Fed has kept interest rates near zero since 2008, and in September promised open-ended bond purchases to support lending further.
However, on Thursday minutes from the Fed’s policy review for last month pointed to rising concerns over how the asset purchases will affect financial markets.