WASHINGTON — The U.S. December employment report showed definitive signs of economic weakening, with payrolls up at just 18,000 and the civilian unemployment rate rising 0.3 of a point to 5.0%.To be sure, there were new seasonal adjustments for the unemployment rate. But the December jump was across categories and is more than noise. Most statistical readjustments are 0.1 point. This 0.3-point gain marks highest unemployment rate since 5.1% in September 2005. All categories of age and sex showed fewer persons employed and more unemployed. The net October-November payroll revision was a plus-10,000 jobs. Average hourly earnings were up 0.4%, but this is a 3.7% increase over the year, and hours stagnated — additional signs of weakness. In terms of payroll composition, manufacturing fell 31,000, construction dropped 49,000, retail slid 24,900, motion pictures fell 11,600 — probably a result of the writers strike — and the financial sector lost 4,000. Gains were seen in health care at up 36,900, restaurants at plus 26,600, and local education at a 16,500 increase, with the last two areas possibly temporary due to any lingering adjustment problems at this time of year. This is a very weak report showing economic slowing over the course of the fourth quarter. The one-month employment diffusion index was 48.8, its lowest since September 2003, when there was little hiring.
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