By Luca Di Leo and Meena Thiruvengadam
JANUARY 8, 2010, 12:20 P.M. ET
WASHINGTON — U.S. job losses were higher than expected in December of last year and the unemployment rate remained at a lofty 10%, a sign the labor market has still some way to recover.
Although the November 2009 data was revised to show the U.S. economy added jobs for the first time since the recession began two years earlier, the December payroll number was worse than forecast.
Nonfarm payrolls fell by 85,000 last month, compared with a revised 4,000 gain in November, the Labor Department said Friday.
Economists surveyed by Dow Jones Newswires had expected a payroll decrease of just 10,000. The November figure originally showed an 11,000 drop in payrolls. . .
. . . The central bank’s rate-setting committee left interest rates close to zero mid-December in the face of low inflation and still-high unemployment. Since the financial crisis began in 2007, the Fed has slashed its benchmark lending rate from a peak of 5.25%.
Minutes of last month’s meeting, released earlier this week, showed that Fed officials remained worried about the labor market’s weakness. “Several participants observed that more than one good report would be needed to provide convincing evidence of recovery in the labor market,” the December minutes showed.
Fed officials have predicted the unemployment rate will average between 9.3% and 9.7% in the fourth quarter of 2010 due to a slow recovery.
The U.S. economy is expected to have expanded at a healthy pace in the second half of 2009, but the jobs market’s weakness, tight bank lending and a fading government stimulus is seen keeping the recovery contained.
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