US hiring cools in December as economy adds just 199,000 new jobs

U.S. job growth faltered in December just before the rapid spread of the new omicron coronavirus variant cast a fresh threat over the economy and its recovery from the pandemic.

The Labor Department said in its monthly payroll report released Friday that payrolls in December rose by 199,000, sharply missing the 400,000 jobs forecast by Refinitiv economists. The unemployment rate, which is calculated based on a separate survey, dropped to 3.9% from 4.2% — the lowest level since the pandemic began. 

The labor market had been gaining momentum after a delta-induced slowdown over the summer, but the latest figure represents the second consecutive month of worse-than-expected growth, following upwardly revised gains of 249,000 in November and 648,000 in October. The last time job growth was this slow was in December 2020, when employers cut 306,000 positions. 

The figures suggest that despite high demand for workers, businesses are still struggling to attract new employees as factors like a lack of childcare, virus fears and large stimulus savings persevere. The labor force participation rate was unchanged at 61.9% as the labor shortage persists, despite the lower-than-expected unemployment drop.