Unemployment drops to 9.4%, but only 103K jobs added

The nation’s unemployment rate dropped four-tenths of a point to 9.4% in December but the number of jobs added fell short of expectations.  According to the Department of Labor, the economy only added 103,000 jobs, an improvement over the previous few months, but short of the 160,000 economists had been expecting, and far short of ADP’s projection of 297,000.  In another oddity, the number of unemployed fell by five times the number of jobs added:

The unemployment rate fell by 0.4 percentage point to 9.4 percent in December, and nonfarm payroll employment increased by 103,000, the U.S. Bureau of Labor Statistics reported today. Employment rose in leisure and hospitality and in health care but was little changed in other major industries.

The number of unemployed persons decreased by 556,000 to 14.5 million in December, and the unemployment rate dropped to 9.4 percent. Over the year, these measures were down from 15.2 million and 9.9 percent, respectively.

The one explanation for the difference would be an increase in discouraged workers. That number rose from last December by 389,000; November’s figures are not available (the historical data set was down). Also, the civilian labor force participation rate did drop to 64.3%, which indicates that people are still leaving the work force rather than rejoining it.

All in all, this is a disappointing report, even with the drop in the top-line number. For the year, job growth has averaged 94,000 per month, below the level needed to keep up with population growth. For workers and employers, 2010 was a lost year.

Update: The AP doesn’t sugar-coat it, at least not much:

The nation’s unemployment rate dropped to 9.4 percent last month, its lowest level in 19 months. That was because more people found jobs, but also because some people gave up on their job searches.

The Labor Department says employers added 103,000 jobs in December, an improvement from November’s revised total of 71,000 but far below most analysts’ expectations.

Once unemployed workers stop looking for work, the government no longer counts them as unemployed.

According to the DoL numbers, five times more people gave up looking than found jobs, but otherwise this is about right.