By Christopher S. Rugaber Associated Press
WASHINGTON — U.S. employers added a scant 74,000 jobs in December, the fewest in three years. The disappointing figure ends 2013 on a weak note and raises questions about whether the job market can sustain its recent gains.
Economists cautioned that cold weather likely played a role in the sharp slowdown in hiring. Job gains had averaged 214,000 in the previous four months.
The Labor Department said Friday that the unemployment rate fell from 7 percent in November to 6.7 percent, the lowest level since October 2008. But the drop occurred mostly because many Americans stopped looking for jobs. Once people without jobs stop looking for one, the government no longer counts them as unemployed.
The stock market fell in early trading. The Dow Jones industrial average dropped 46 points to 16,398 . And the yield on the 10-year Treasury note fell to 2.88 percent from 2.97 late Thursday.
It’s unclear whether the sharp hiring slowdown might lead the Federal Reserve to rethink its plan to slow stimulus efforts. The Fed decided last month to pare its monthly bond purchases, which are designed to lower interest rates.
“I don’t think the Fed is going to be panicked by this,” said Joel Naroff, president of Naroff Economic Advisors.
Naroff suggested that the 6.7 percent unemployment rate — a drop of more than a full percentage point since 2013 began — will eventually lead many employers to raise wages.
“It doesn’t change what they’re thinking,” Naroff said of the Fed.
Many economists said they want to see more data before concluding that the economy has lost momentum.
“We stop short of making larger observations based on this number,” said Dan Greenhaus, chief global strategist at brokerage firm BTIG. “The economy, based on any number of other indicators, has been picking up steam of late which makes today’s number..curious.”
Cold weather might have slowed hiring in December. Construction firms cut 16,000 jobs, the biggest drop in 20 months.
Other economists were also skeptical. Mark Vitner, an economist at Wells Fargo, pointed out that there were unusual job losses in several industries. Accounting and bookkeeping services lost 24,700 jobs, the most in nearly 11 years.
And performing arts and spectator sports cut 11,600, the most in 2 1/2 years. The movie industry shed 13,700 jobs.
“These are not the areas that tend to sway the employment report,” Vitner said.
Health care cut 6,000 positions, the first cut in 10 years. That could raise questions about the impact of President Barack Obama’s health care reform.
Vitner noted that health care layoffs had been announced over the fall and the government figures appear to be “genuine.”
Transportation and warehousing cut a small number of jobs, suggesting shippers hired fewer workers for the holidays. Government cut 13,000.
Despite December’s sharp slowdown, monthly gains averaged 182,000 last year, nearly matching the previous two years.
The proportion of people working or looking for work fell to 62.8 percent, matching a nearly 36-year low.
One bright spot was manufacturing. Factories added 9,000 positions, the fifth straight gain. Still, that’s down from 31,000 in November. Retailers added 55,000 jobs.
Recent data have painted a picture of an economy on the steady rise. Exports hit a record level in November, lowering the U.S. trade deficit. Businesses have ordered more manufactured goods. Auto sales reached a six-year high in 2013.
Analysts now estimate that the economy expanded at a healthy annual rate of 3 percent to 3.5 percent in the October-December quarter. That’s up from earlier forecasts of a 2 percent rate or less. It would follow a strong 4.1 percent growth rate reported for the July-September quarter.