WASHINGTON, Jan 5: US employers added a healthy 167,000 new jobs in December, the government said in a report on Friday that suggested upbeat economic conditions despite evidence of a slowdown.

The job report was much stronger-than-expected. On average, analysts were expecting the Labour Department's “non-farm payrolls” survey to show only 100,000 new jobs were created last month.

The department also revised up the November non-farm figure to 154,000, much more than its initial forecast of 132,000.

It said the December jobless rate was stable at 4.5pc, in line with forecasts. “This employment report appears strong,” said Stephen Gallagher, a US economist at Societe Generale.

Overall job growth accelerated to its fastest clip since September when 203,000 new jobs were added to the economy.

Average hourly earnings last month rose eight cents to $17.04, or 0.5 per cent over November and 4.22 per cent compared to December 2005. Analysts had expected a month-on-month increase of just 0.3 per cent.

“This news I think is undoubtedly a strong reflection on both our job market and the economy. But on the perverse prism that the Fed uses, this is probably a fairly troubling set of news,” observed Carl Tannenbaum, a chief economist at ABN Amro North America in Chicago.

Tannenbaum said it was good that job growth was improving, but that the jump in hourly earnings, especially over the past 12 months, was likely to reinforce the Federal Reserve's concerns about inflation risks.

The US central bank kept its key fed funds rate pegged at 5.25 per cent at its last policy meeting in December and most analysts expect the central bank to hold rates steady again at its next rate meeting on January 31.

Minutes from the Fed’s December meeting released earlier this week revealed that policymakers saw inflation risks as the “greatest concern” facing the world’s biggest economy.

Aside from rising hourly wages, other inflation gauges, including wholesale prices, have surged in recent months.

Job growth was strong last month in the services and business sectors, which added 178,000 and 50,000 positions respectively, but these gains were offset by losses in other industries.

The manufacturing industry shed 12,000 positions, the goods-producing sector lost 11,000 jobs and the construction sector laid off 3,000 workers.

Over all of 2006, the US economy added 1.8m jobs. Job creation wobbled in the middle of the year to reinforce worries about a wider economic slowdown, but now appears to be firmly back on track.

Other economists supported Tannenbaum's outlook that the Fed is likely to keep rates held steady in the near-term.

“The Federal Reserve will be on hold with such numbers. Chances for rate cuts in mid-year or later remain viable, but near-term rate cuts are very unlikely given recent employment, income and consumer spending evidence,” Gallagher said.

“Given this data, the Fed is unlikely to change policy in January,” echoed John Silvia, a chief economist at Wachovia Economics Group.

The job numbers nonetheless reinforced hopes that an economic recovery is under way after growth cooled markedly last year, primarily due to a housing market slowdown.

The US economy grew at an annualised pace of 2.0 per cent in the July-September quarter, the slowest since the final quarter of 2005 and a deceleration from the second quarter’s 2.6pc rate.

Although the housing market remains a concern, economists said the job report suggests the economy is bearing up well and will not slip into a sharper decline in coming months.—AFP