WASHINGTON - A weaker-than-anticipated report on the US labor market, showing just 112,000 jobs added in November, cast fresh doubts over the pace of growth of the world's largest economy.
The slowdown in nonfarm payroll job creation -- seen as essential to sustainable economic growth -- came after a surge of 303,000 new jobs in October. Economists had been expecting, on average, some 200,000 new jobs in November.
The unemployment rate dipped 0.1 percentage points to 5.4 percent, the Labor Department said.
"The payroll report was unambiguously soft," said economist John Lonski of Moody's Investors Services, adding that it appeared to contradict other surveys suggesting increased hiring in manufacturing and other areas.
"The conclusion you draw is payrolls are growing but at a rate that is well below the rate that is usually associated with the current state of the US economy."
"Today's nonfarm payroll figure was a disappointment, pure and simple," said Merrill Lynch economist Sheryl King, who said recent data point to US economic growth of below three percent in the first quarter of 2005.
"A typical payroll gain six months following the first tigthtening by the Fed is 200,000 -- today's number fell well short of the mark."
Payroll gains in September and October were revised down by a total of 54,000. October's gains were revised to 303,000 from 337,000. Over the past three months, job growth has averaged 178,000 per month.
Nonetheless, employment is up 2.3 million since its nadir in August 2003.
And some economists say that job growth remains fairly good when averaged over the past few months.
The November report "was a little disappointing," but still reasonably good in the context of the October report, said Joel Naroff of Naroff Economic Advisors.
Naroff said the employment report points to economic growth in the range of three to 3.5 percent.
"It's not a lean, mean jobs machine, but we are moving slowly toward decent gains," Naroff said.
"If we start seeing that 200,000 jobs a month, that's OK. ... It will bring the unemployment rate down and it will generate consumption."
A separate report on the vast service sector of the US economy was better than expected. The Institute for Supply Management reported its nonmanufacturing index rose to 61.3 percent from 59.8 percent in October.
An index above 50 indicate growth, and the sector has been growing for the past 20 months, the ISM noted.
Details of the jobs report were weak. The average workweek fell by a tenth of an hour to 33.7 hours, while total hours worked in the economy dropped by 0.2 percent. Average hourly wages rose one cent, or 0.1 percent, to 15.83 dollars.
A separate survey of households showed much greater strength, although economists have cautioned that the establishment survey is generally more reliable. In the household survey, employment grew by 483,000, while unemployment fell by 45,000 to 8.027 million, producing an unemployment rate of 5.4 percent.
Analysts said the Federal Reserve was unlikely to be deterred from another quarter-point increase later this month as it lifts key interest rates to a more neutral level.
But the data call into question whether the Fed will keep boosting rates into 2005.
Fed chairman Alan Greenspan and his team "seem committed to a December rate hike, (but) market expectations for further hikes right through 2005 are off the mark for an economy that is barely making any progress in narrowing its labor-market slack," Avery Shenfeld at CIBC World Markets said.
Merrill Lynch's King was more emphatic, saying, "We wonder aloud what the grounds are for raising a funds rate? At most, economic growth is growing in line with trend."
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