Barack Obama hails 'clear' trend of lower unemployment

resident Obama has cautiously hailed a "clear" trend of job growth, and called on businesses to boost investment.

His remarks at a window manufacturer came as the US unemployment rate dropped 0.4 points to 9.4% in December, the largest one-month drop since 1998.

Some 103,000 jobs were created last month, the Labor Department said, although this was fewer than forecast.

But Federal Reserve Chairman Ben Bernanke warned employment could remain depressed for four to five more years.

The lower unemployment rate, while cheering, came not only because more people found jobs, but also because 260,000 had given up looking and ceased being counted as unemployed.

'Invest now'

Touring an energy-efficient window manufacturer in Maryland, Mr Obama said the jobs report showed a clear trend towards economic growth.

He predicted a package of tax cuts forged with Republicans last month would continue to boost hiring, and urged businesses who were thinking about creating jobs to press ahead.

"If you are planning on making investments in the future, make them now and that will help us grow the economy," he said.

At the US Senate, meanwhile, Federal Reserve chairman Ben Bernanke warned the job market might not return to normal levels for another four or five years."We want businesses to grow, we want this economy to grow and we want to put people back to work."

He said the economy had entered a "self-sustaining recovery" powered by growing consumer spending and robust business investment.

But, he added a warning: "Notwithstanding these hopeful signs... [with] employers reportedly still reluctant to add to payrolls, considerable time likely will be required before the unemployment rate has returned to a more normal level.

"Persistently high unemployment, by damping household income and confidence, could threaten the strength and sustainability of the recovery."

According to official Department of Laborfigures, seasonally adjusted non-farm payroll employment increased by 103,000, with the number of unemployed people dropping by 556,000 to 14.5 million.

Overall employment for October and November was revised to show 70,000 more job gains than earlier reported, and the unemployment rate is now at its lowest since May 2009.

Private hiring increased in December by 113,000, while government employment fell by 10,000.

Employment rose by 47,000 in the leisure and hospitality sector and by 36,000 in healthcare, but was little changed in other major industries, the Labor Department said.

Federal Reserve Governor Elizabeth Duke also sounded a cautiously upbeat note in remarks on Friday.

"Overall, the recovery in economic activity to date has been uneven and has not been sufficient to reduce unemployment noticeably," she said. "But I am encouraged by signs that the recovery may have gained traction recently."

The falling unemployment rate appeared to counter concerns over fewer-than expected jobs being created, with shares on Wall Street relatively unchanged in early trading.

Meanwhile, the euro rose into positive territory against the dollar after the report, but then relinquished those gains.

'Slow recovery'

"The headline miss [on jobs created] is pretty bad, but the drop in the unemployment rate is the one reason why the dollar has not collapsed completely," said Brian Dolan, chief strategist from Forex.com.

"Overall, a very disappointing number that reinforces the idea that we're in for a long, slow jobless recovery."

Moody's Analytics economist Ryan Sweet said while the job market was likely to improve, the lower unemployment rate was unlikely to be sustained.

And economist Peter Morici, professor at the Smith School of Business, University of Maryland, agreed that this was a disappointing set of data.

He said that while there had been a string of stimulus measures taken in the US, the country's huge trade deficit was holding back job creation because the country was importing far more than it produced.

"The growing trade deficit is a tax on domestic demand that offsets much of the benefits of stimulus spending and tax cuts," he said.

Meanwhile, a US business group, the Conference Board, said that while the job market had more momentum than it did going into 2010, the report "won't help the continuing weakness in consumer confidence"