Hiring Likely Modest in December       01/09 06:11

   

   WASHINGTON (AP) -- Hiring likely remained subdued last month as many 
companies have sought to avoid expanding their workforces, though the job gains 
may be enough to bring down the unemployment rate.

   December's jobs report, to be released Friday, is likely to show that 
employers added a modest 55,000 jobs, economists forecast. That figure would be 
below November's 64,000 but an improvement after the economy lost jobs in 
October. The unemployment rate is expected to slip to 4.5%, according to data 
provider FactSet, from a four-year high of 4.6% in November.

   The figures will be closely watched on Wall Street and in Washington because 
they will be the first clean readings on the labor market in three months. The 
government didn't issue a report in October because of the six-week government 
shutdown, and November's data was distorted by the closure, which lasted until 
Nov. 12.

   Another wrinkle: The economy lost 105,000 jobs in October, mostly because 
federal government employment fell 162,000, reflecting a purge of federal 
workers earlier last year by Elon Musk's Department of Government Efficiency. 
That drop won't be repeated.

   Still, sluggish hiring in December would underscore a key conundrum 
surrounding the economy as it enters 2026: Growth has picked up to healthy 
levels, yet hiring has weakened noticeably and the unemployment rate has 
increased in the last four jobs reports.

   Most economists expect hiring will accelerate this year as growth remains 
solid. Yet they acknowledge there are other possibilities: Weak job gains could 
drag down future growth. Or the economy could keep expanding at a healthy clip, 
while automation and the spread of artificial intelligence reduces the need for 
more jobs.

   Economists do expect Friday's jobs report to have some good news, driven 
partly by a rebound from the government shutdown, which likely drove a higher 
unemployment rate in November. Still, should the rate remain at 4.6% or even 
tick higher, that would be a cause for concern.

   "I'm really looking for a lot of that weakness to reverse in December," said 
Martha Gimbel, executive director of the Yale Budget Lab, "and if it doesn't, I 
am going to start getting much iffier about the labor market."

   Either way, December's report will cap a year of sluggish hiring, 
particularly after "liberation day" in April when President Donald Trump 
imposed sweeping tariffs on dozens of countries, though many were later delayed 
or softened.

   The economy generated an average of 111,000 jobs a month in the first three 
months of the year. But that pace dropped to just 11,000 in the three months 
ended in August, before rebounding slightly to 22,000 in November.

   Even those figures are likely to be revised lower in February, when the 
government completes an annual benchmarking of the jobs figures to an actual 
count of jobs derived from companies' unemployment insurance filings. A 
preliminary estimate of that revision showed it could reduce total jobs as of 
March 2025 by 911,000.

   And last month, Federal Reserve Chair Jerome Powell said that the government 
could still be overstating job gains by about 60,000 a month because of 
shortcomings in how it accounts for new companies as well as those that have 
gone out of business. The Labor Department is expected to update those methods 
in its report next month.

   Last November, the U.S. economy had just 770,000 more jobs than 12 months 
earlier, down from 1.9 million in the 12 months ending in November 2024 and the 
smallest yearly gain since early 2021. The benchmark revisions next month will 
likely reduce that figure even further.

   With hiring so weak, the Federal Reserve cut its key short-term interest 
rate three times late last year, in an effort to boost borrowing, spending, and 
hiring. Yet Powell signaled that the central bank may keep its rate unchanged 
in the coming months as it evaluates how the economy evolves.

   Should December's jobs report come in surprisingly weak, it could strengthen 
case for a rate reduction at the Fed's next meeting Jan. 27-28.

   Even with such sluggish job gains, the economy has continued to expand, with 
growth reaching a 4.3% annual rate in last year's July-September quarter, the 
best in two years. Strong consumer spending helped drive the gain. The Federal 
Reserve Bank of Atlanta forecasts that growth could slow to a still-solid 2.7% 
in the final three months of last year.

   Many economists are optimistic that growth will pick up in 2026, in part 
because Trump's tax legislation, approved last summer, should lead to outsize 
tax refunds this spring. If growth does accelerate, it's possible hiring may as 
well. At the same time, there are signs that companies are using technology and 
other tools to make their workers more efficient, which can spur growth without 
requiring more jobs.

   At the same time, inflation remains elevated, eroding the value of 
Americans' paychecks. Consumer prices rose 2.7% in November compared with a 
year ago, little changed from the beginning of the year and above the Fed's 2% 
target.