Unemployment Rate Hits Two-Year High

Washington, DC, January 4, 2008—The nation’s unemployment rate hit a two-year high of 5 percent in December after payrolls grew by just 18,000 jobs.

It was the weakest job growth in more than four years, according to the Labor Department.

The unemployment rate jumped from 4.7 percent in November. The 5 percent rate is the highest since the Gulf Coast hurricanes in 2005.

The December employment picture was much weaker than economists were expecting. They were forecasting the unemployment rate to bump up to 4.8 percent and for employers to add around 70,000 jobs to their payrolls.

Jobs were lost in manufacturing, construction and financial services, which are all being hit hard by the housing slump.

However, the government added 31,000 jobs in December, while private firms cut payrolls by 13,000, underscoring the weakness.

For 2007, the economy added 1.33 million jobs and the unemployment rate averaged 4.6 percent, the same as in 2006.

Average hourly earnings rose to $17.71 in December, a 0.4 percent increase from November.