More evidence that the US economy is dramatically slowing. The latest official figures show that employers there added only 18,000 jobs in December. That is much less than economists had predicted and way below November’s total of 115,000.
The unemployment rate is now 5% – its highest in more than two years. It has been creeping up since the summer; in June it stood at 4.5% of the working population and it had held steady at 4.7% through the autumn.
Manufacturing industries shed over 30,000 jobs in December and construction cut another almost 50,000 though harsh winter weather may have played a role there.
What growth there was came from government hiring as well as in the education and health sectors.
Economist are now predicting the US central bank, the Federal Reserve, will forget about fighting inflation for now and instead Fed chairman Ben Bernanke and his policy-makers will concentrate on boosting the US economy by further reducing the cost of borrowing from the current 4.25%. There is now speculation about a 0.5% interest rate cut at the Fed’s meeting at the end of January.