With much of the country in the deep freeze over the last month, it appears that the chill extended to the latest report on the job market from the government. The Labor Department says employers added 74,000 jobs in December. That was well short of the roughly 200,000 jobs economists had expected.
With the holiday shopping season in full bloom, retail added 55,000 jobs while wholesale trade contributed another 15,000 jobs. Business and professional services chipped in 19,000 jobs, while manufacturers added another 9,000 jobs.
The unemployment rate slipped 0.3 percent to 6.7 percent, the lowest since October 2008. But that decline is being blamed on the fact that many Americans gave up looking for work during the month, giving the report a deceptively positive appearance at first glance.
Most economists say they believe jobs creation will proceed at a moderate pace, despite some of the fog generated around the Labor Department report.
"Bad weather was likely a major factor in the disappointing job gains for December. The large drop in construction payrolls in December certainly supports such a theory," says Scott Anderson, chief economist at Bank of the West. Word that construction employment dropped by 16,000 jobs flies in the face of a surge in new-home building. In November, for example, the Commerce Department said housing starts rose to the highest level in nearly six years.
In her blog, Mesirow Financial chief economist Diane Swonk was also seizing upon weather as an explanation for the disappointment. "A whopping 1.7 million workers were forced to accept part-time instead of full-time work because of weather conditions alone; 273,000 people with jobs couldn't work because of the severe weather," Swonk said in her blog.
Since economists doubt that job creation had truly hit a brick wall, there's no rush to predict that the Federal Reserve will immediately reconsider its plans to throttle back on asset purchases. But Fed officials often say their plans are "data-dependent," and a more convincing series of lackluster economic reports could force their hand. "The numbers were weak enough to create some questions as to the sustainability of recent employment gains, and could slow down the pace of Fed tapering should the job growth numbers not improve in January," Anderson says.
The Fed's next policy-setting meeting is scheduled for Jan. 29-30, the last meeting at which Chairman Ben Bernanke will preside.
Are you hopeful about the job market this year? How do you feel about your own prospects?
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