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U.S. Payrolls Rise 18,000, Smallest Gain Since 2003 (Update1) By Bob Willis


Jan. 4 (Bloomberg) -- Hiring in the U.S. slowed more than forecast in December and unemployment jumped to a two-year high, raising the odds the Federal Reserve will need to cut interest rates to ward off an economic slowdown.
Payrolls rose by 18,000, the least since August 2003, after a 115,000 gain in November that was larger than initially reported, the Labor Department said today in Washington. The jobless rate rose to 5.0 percent from 4.7 percent in November.


Slowing job growth is the clearest sign yet that the U.S. expansion is at risk amid tighter credit, a deeper housing slump and a stumbling stock market. Fed policy makers last month lowered growth forecasts and said they were concerned a ``marked deceleration'' in spending could hurt the economy, according to meeting minutes.


``The labor market is loosening up and bodes poorly for consumer spending,'' Dana Saporta, an economist at Dresdner Kleinwort in New York who had forecast a gain of 40,000, said before the report. ``Certainly a slowing labor market would add to the risk of recession.''


Treasuries climbed after the report, with the yield on the 10-year note falling to 3.83 percent at 8:35 a.m. in New York from 3.89 percent late yesterday.