Obama welcomes US jobless rate fall

Saturday 08 January 2011 22.42
Barack Obama - Visited a window factory near Washington yesterday
Barack Obama - Visited a window factory near Washington yesterday

US unemployment fell dramatically to 9.4% in December, which was a boost for President Barack Obama but one tempered by evidence the economy is still not creating enough jobs.

Figures from the US Labor Department showed the unemployment rate fell last month to its lowest level since May 2009, although many fewer jobs were created than expected.

Mr Obama cautiously welcomed the news: 'We know these numbers can bounce around from month to month, but the trend is clear,' he said while visiting a window factory on Washington's outskirts.

'The economy added 1.3m jobs last year. And each quarter was stronger than the previous quarter, which means that the pace of hiring is beginning to pick up.'

Mr Obama welcomed the 113,00 jobs created by the private sector in December - gains that were partially eroded by local government losses - but cautioned the unemployment rate was still unacceptably high.

'You've still got a whole bunch of folks who are out there looking, still struggling. We've got a big hole that we're digging ourselves out of.'

The sharp drop in unemployment from November's 9.8% rate went against most economists' expectations.

But just 103,000 non-farm jobs were created, many fewer than the 150,000 expected, reaffirming a trend of steady but unspectacular job growth.

Since December 2009, payrolls have grown by an average of 94,000 a month.

Federal Reserve chairman Ben Bernanke warned that rate of growth was not enough to replace the 8.5m jobs lost during the economic downturn.

'Payrolls expanded at an average of only about 100,000 per month in 2010 - a pace barely enough to accommodate the normal increase in the labour force and, therefore, insufficient to materially reduce the unemployment rate,' he told Congress.

'Considerable time likely will be required before the unemployment rate has returned to a more normal level,' he said.

Mr Bernanke said that most of his Fed colleagues expect the unemployment rate to be stuck around 8% in two years' time, and the jobs market might not 'normalise' before 2016.

The Labor Department reported that employment rose in the leisure, hospitality and health care sectors but 'changed little in other major industries'.

Despite predictions of a bump in retail hiring, to coincide with Christmas sales, the retail trade added just 12,000 jobs.