Bad weather blamed for December's worse-than-expected US unemployment numbers


Click to follow
The Independent US

Employers in the United States hired only 74,000 new workers in December, well below the almost 200,000 that many economists had predicted -- although the December number may have been affected by bad weather.

By noon in New York, all three major US indices were slightly down.

The overall unemployment rate fell to 6.7 percent, the lowest since October 2008, partly because some people left the work force.

Bad weather can have an impact on the payrolls number if workers did not receive pay for the entire month. The report said about 273,000 Americans did not report for work due to bad weather. December saw much more snow than normal for the time of year.

Taken at face value, the jobs report would be a blow to the momentum of the economic recovery in the United States.

Many analysts were left scratching their heads as they tried to interpret what the report means for the U.S. economic recovery, interest rates and the pace at which the Federal Reserve will continue to reduce its monthly bond-buying stimulus program.

Bill Gross, the influential head of bond fund company PIMCO, disagreed with many when he told Bloomberg Radio that "... by the end of 2015 (the Fed) will not have begun to raise interest rates."

The Federal Reserve said recently it will reduce its $85 billion a month bond-buying stimulus program by $10 billion a month and is expected to keep reducing or "tapering" at a steady pace until the programme is withdrawn.

But the continued reduction of the bond buying depends on improvements in the job market, and analysts said much depends now on how much influence the bad weather really had on December's hiring.

"The Fed will see through it as a weather issue," John Canally, investment strategist and economist for LPL Financial in Boston, told Reuters. " I don't think they will change after one month of anything bad or good - so they are going to stay the course ...

"You have a bunch of traders sitting there looking at a number they don't know anything about, they see a weak number and they hit 'sell'; and when people take a look through it again they will reconsider."