U.S. employers added 103,000 jobs to their payrolls in December, helping push down the unemployment rate to 9.4 percent and feeding cautious hope for a better outlook for 2011, the government reported Friday.
The outlook for older workers also turned slightly rosier in December. For 55-plus job seekers, the rate dropped to 6.9 percent from November’s rate of 7.2 percent.
Though the number of jobs added to the economy was lower than what analysts predicted, the latest labor report indicates a stronger recovery, says Gus Faucher, director of macroeconomics at Moody's Analytics outside Philadelphia. "Everything is pointing in the right direction. The economy is adding jobs, businesses are hiring and businesses will boost their hiring through 2011," Faucher says.
The jobless rate declined by 0.4 percent in December from 9.8 percent in November. It was the lowest rate in a year and a half, according to the Bureau of Labor Statistics (BLS). The December decline was due to new jobs being added, but also to a shrinking of the labor force as people gave up looking for work and weren't counted as unemployed.
For the entire year, the jobless rate was 9.6 percent. During the recession, the unemployment rate peaked at 10.1 percent in October 2009.
Workers 55-plus found jobs
Among men 55 and older, who faced record unemployment levels last year, the jobless rate fell to 7.2 percent last month from 8 percent in November. For men ages 45 to 54, the jobless rate dropped to 8.3 percent last month from 9.2 percent in November, the BLS reported.
Rates for women age 55 and up also fell, to 5.8 percent in December from 6.2 percent in November. Among those ages 45 to 54, the jobless rate fell to 6.6 percent last month from 6.9 percent in November. Much of the rate decline was due to people finding jobs, as opposed to leaving the workforce.
The duration of unemployment for those 55 and older fell to 43 weeks as of December from 45 weeks the previous month. For younger workers, the duration declined to 32 weeks last month from 33 weeks.
The number of people who were out of work for six months or more grew slightly, to 6.4 million, accounting for 44 percent of the jobless in December. More than half, 56 percent, of the long-term jobless were 55 and older, down from 58 percent in November.
"The news is encouraging with the decline in the unemployment rates and the increase in older persons with jobs," says Sara Rix, strategic policy adviser for AARP.
"The unemployment rate remains way above what it was at the beginning of the recession, and it will take a lot to get it down to where it was even three years ago, but we're hoping that this [expansion] continues in the coming months," Rix said.
All told, 14.5 million people were unemployed in December. Nearly 9 million people were working part time because they couldn't find full-time work or because their hours had been cut, the BLS reported.
Health care, temp sector add most jobs
Health care and temporary help services continued to add the most jobs in December. The food services industry also netted job gains, according to the BLS. Federal, state and local governments, however, continued to eliminate jobs.
Though unemployment remains high, U.S. businesses are widely expected to hire as many as 2.5 million workers in 2011 to meet increasing domestic and global demand for goods and services. Adding to payrolls at this level would accelerate a trend that began in 2010, when about 1 million jobs were created.
Even with more robust hiring, however, analysts say it may not be enough to substantially lower the unemployment rate, at least not in the short term. That's largely because discouraged workers who stopped looking for jobs, and consequently weren't counted among the unemployed, are expected to return to the labor pool as the market heats up.
Mark Zandi, chief economist at Moody's Analytics, says the business conditions for brisk hiring this year — healthy corporate profits, strong balance sheets and better access to credit by smaller firms — are coming into place.
Moreover, consumer confidence is growing, chipping away at employers' reluctance to hire permanent staff. By the end of the year, Zandi says, the jobless rate could sink to 9 percent.