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Unemployment Rate Drops to 5.6 Percent as Payrolls Increase by 252K

Unemployment Rate [1]

Updated.

The U.S. unemployment rate slipped another 0.2 percentage points in December as employers introduced 252,000 new jobs.

The Bureau of Labor Statistics (BLS [2]) said Friday [3] that the national unemployment rate was down to 5.6 percent by year-end 2014, bringing that number down to its lowest level since June 2008. Economists had expected the jobless rate would fall slightly to 5.7 percent and that non-farm payrolls would increase by 245,000. Earlier this week, ADP reported [4] that private payrolls last month had increased by 241,000.

December's slightly better than expected report also brought upward revisions for both October and November payrolls. The government now estimates employers added 261,000 jobs and 353,000 jobs in those months, respectively.

While the headline data looks strong, the numbers underneath it are less encouraging. The drop in the unemployment rate was accompanied by a 0.2 percentage point drop in labor force participation as more Americans gave up on finding a job.

According to the government's household survey, 2.3 million people were classified as "marginally attached" to the workforce in December, up from 2.1 million in November (albeit down compared to the same time a year prior). Out of that group, 740,000—an increase of 42,000 from the previous report—had given up on looking for work.

Factoring in those marginally attached Americans and workers who are employed only part-time for economic reasons, BLS puts the U-6 unemployment rate at 11.2 percent.

Another sour note in December's data: wages fell 5 cents to an average of $24.57, nearly undoing a 6-cent increase recorded in November.