US unemployment rate at four-year low

The US economy added 146,000 jobs last month, sending the unemployment rate down slightly from 7.9 to a four-year low of 7.7 per cent.

The result was better than economists had expected, with superstorm Sandy not having as much of an impact on the employment picture as anticipated.

Nevertheless, the storm did hit the economy hard.

Sandy knocked retail sales and industrial output in October and led to a big spike in claims for jobless benefits, one of the reasons economists expected job growth to slow.

While 369,000 workers were unable to make it to work in the aftermath of the storm and a further 1.1 million ended up working only part time, the labour department says it still counted them as employed.

Analysts say the declining unemployment rate can be partly attributed to people giving up on looking for work and dropping out of the labour market.

The labour force participation rate, or the proportion of working-age Americans who have a job or are looking for one, fell back to near a 31-year low.

A big drop in consumer confidence in December has also offered a cautionary note on the economy's health.

The retail sector was healthy, adding 53,000 jobs as the holiday shopping season approaches.

The pace of retail hiring over the last three months was the fastest since 1995.

There were also increases in information and temporary help hiring.

But transport, financial, education and health services employment slowed.

The manufacturing sector shed 7,000 jobs last month, marking the third month it has dropped this year.

Slow recovery Dr Alan Krueger, chairman of the president's Council of Economic Advisers, says the latest numbers show the US economy is continuing to heal.

"Today's report shows a picture of the economy continuing to heal, but there's a long way to go until we're back to full health," he said.

"And that's why the president has been pushing the Congress for a balanced plan to address our fiscal problems and support the economy." Jan Hatzius, chief economist at Goldman Sachs, says the recovery has only been gradual.

"We're still seeing a gradual improvement in labour market conditions underneath all of the month-to-month noise," he said.

"But it's still pretty gradual, it's still quite slow.

That was the impression prior to this and that's the impression still." The latest figures come amid uncertainty generated by the so-called "fiscal cliff," a mix of tax increases and spending cuts that will hit on New Year's Day unless the White House and Congress can strike a deal to avert it.

If you listen to the House of Representatives speaker, Republican John Boehner, the chances of that appear dim.

Mr Boehner had what he called a pleasant but unproductive phone call with the president this week, and he lashed out at the White House's negotiating style.

"Reports indicate that the president has adopted a deliberate strategy to slow walk our economy right to the edge of the fiscal cliff," he said.

His Democratic counterpart, Nancy Pelosi, says it is the Republicans who are stalling.

"This is a moment of truth.

The clock is ticking, Christmas is coming, the goose is getting fat, but in many homes across America it's a very, very lean time," she said.

The Congressional Budget Office says going over the fiscal cliff could send the economy back into recession.

Many economists think businesses are already holding back on hiring and investment while tax rates and government spending for next year remain unknown.

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