Job Gains Hit Three-Year Low: Anomaly or Alarming New Trend?

The U.S. economy added an average of 204,000 jobs from August through November, but it was not until October that the momentum in the labor market recovery noticeably changed. That month, the September gain was upwardly revised to 163,000 from 148,000, and August’s payroll additions were upwardly revised to 238,000 from 193,000.

With nonfarm payroll employment rising by 200,000 in October and 241,000 jobs in November, it seemed those economists who expected the labor market recovery to take giant steps toward the end of the year were correct.

On Wednesday, payroll processor ADP reported employers added 238,000 new positions to payrolls last month, prompting Moody’s Analytics chief economist Mark Zandi, whose firm helps compile the report, to comment that “job growth [has] meaningfully accelerated.”

However, strong employment gains were absent from The Bureau of Labor Statistics’ December Employment Situation Report. The United States economy created just 74,000 jobs last month, the slowest pace in three years. Economists had been expecting employers to add between 191,000 and 196,000 new jobs to payrolls, and the huge shortfall put into question the theory that the labor market was finally gaining sustained momentum.

The low figure also stood in contrast to the 188,550 jobs per month added from January to November of last year and the 182,750 jobs added per month in 2012.