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Hiring practically stalled in December, driving the nation's unemployment rate up to a two-year high of 5 percent and fanning fears of a recession.
Employers last month added the fewest new jobs to their payrolls in more than four years, according to the employment report released Friday by the Labor Department. The report showed that employment conditions are deteriorating, strained by a housing slump and credit crunch that are sapping economic strength.
"The economy is getting hit by some body blows. The big question is whether the economy can withstand it or will it take a fall," said Ken Mayland, president of ClearView Economics.
Stocks lost ground Friday after the government's much-anticipated employment report showed weaker-than-expected job growth and a rise in the unemployment rate. The major indexes each fell more than 1 percent, including the Dow Jones industrial average, which lost more than 200 points.
The Labor Department's report employers raised payrolls by only 18,000 and that the nation's unemployment rate rose to its highest level since November 2005 unnerved investors worried that a weakening job market will hurt consumer spending
The nation's service sector grew in December at a pace slightly slower than the month before, providing more evidence that the U.S. economy is struggling because of higher oil prices and a tight credit market.
Total payrolls — both private employers and government — grew by just 18,000 last month..
The government added 31,000 jobs in December, while private employers actually cut payrolls by 13,000, underscoring the weakness.