Job growth shrank significantly in December, the government reported on Friday, setting off renewed fears of a recession and all but assuring that interest rates will be lowered this month. The news sent stocks down sharply in morning trading.
The economy added 18,000 jobs to nonfarm payrolls, the Labor Department said, the smallest monthly gain in more than four years. The unemployment rate rose to 5 percent after hovering near 4.7 percent since the summer.
“This is a far weaker report than we expected,” Jared Bernstein, an economist at the Economics Policy Institute, wrote in an e-mail message. “The uptick in the unemployment rate alone, which won’t be revised away, is flashing recession.”
Investors appeared to concur. By 11:15 a.m., the Dow Jones industrial average was down 194.28 points, or 1.5 percent, at 12,862.44. The Standard & Poor’s 500-stock index lost more than 1.8 percent, and the technology-heavy Nasdaq composite was off by 2.9 percent.