WASHINGTON, Jan 4: The US economy succumbed to housing and credit troubles in Dec as just 18,000 jobs were added and the unemployment rate rose to 5.0 per cent, data showed on Friday, highlighting fears of recession.

Private-sector employment shrank in the month for the first time since 2003, with the report barely positive on a gain in government jobs, according to the Labour Department’s non-farm payrolls report.The survey, seen as one of the best indicators of economic momentum, showed a sharp decrease from November, which had job gains of 115,000, revised up from an initial estimate of 94,000.

The overall unemployment rate rose from 4.7 per cent in November.

The report showed the smallest number of jobs created since August 2003 and the highest unemployment rate since November 2005, in the wake of Hurricane Katrina. Analysts had expected on average a gain of 70,000 jobs and a jobless rate of 4.8 per cent.

The report is the “strongest evidence so far that the economic expansion is grinding to a halt,” said Peter Morici, an economist at the University of Maryland.

“The Federal Reserve will aggressively cut interest rates to combat the US slowdown. However, these efforts may prove insufficient to head off a difficult recession.”—AFP