Daniel Powell 7:02 p.m., Aug. 31
U.S. Adds 200,000 Jobs in December
The U.S. gained 200,000 jobs in December and the unemployment rate fell to 8.5% from a revised 8.7% in November, according to data released by the federal government this morning (Jan. 6). Both the jobs gain and unemployment rate were better than economists expected. Many economists said that the report, combined with recent indications of an improving consumer mood, suggest the economy may be turning the corner. However, many of the jobs were the result of seasonal hiring. Retail and leisure and hospitality jobs rose sharply, for instance; these usually reverse in January, economists told MarketWatch. Also, the economy needs 250,000 job gains a month for several years just to reduce the unemployment rate to pre-recession levels, noted MarketWatch.
Initially, the stock market dropped in response to the news. Although movements in one day are often meaningless, one explanation for the decline may be that this market is feeding off expectations of more liquidity — initiatives to lower interest rates even further by central banks in the U.S. and Europe, in particular. Good economic news might crimp such central bank actions. Suspiciously, Federal Reserve Bank of New York President William Dudley stated immediately today that further efforts to lower interest rates would be appropriate. It appeared to be an effort, coordinated with the Fed in Washington, to tell the markets that more juice is coming, despite the good employment news. At least initially, Dudley's remarks weren't soothing the market.
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