The Labor Department on Friday reported December jobs gains were much lower than expected as the year ended. U.S. payrolls rose 74,000 last month, the smallest rise in three years, while the unemployment rate dropped to 6.7%, Labor said Friday. Here are highlights: 
 
 Revisions: Employment gains for November and October were revised upward by a total of 38,000. Employers added 241,000 jobs in November, up from an initially reported 203,000. October’s gain was unrevised at 200,000. 
 
 Jobless Rate: The December unemployment rate decreased to 6.7%, from 7.0% the prior month, but that was because more people dropped out of the workforce rather than found new jobs. 
 
 Yearly Figures: For 2013, employers added an average of 182,000 jobs each month. That is roughly in line with 2012, when payrolls expanded by about 183,000 positions each month. 
 
 Participation Rate: The December civilian labor force participation rate was 62.8%, weaker from a month earlier. It is also down from 63.6% in December 2012. 
 
 Longer-run Trend: December’s mild advance held back longer-term averages. Monthly job gains averaged 172,000 over the past three months, which was in line as well with the six-month trend. For the first half of 2013, payrolls expanded by 195,000 each month. 
 
 Winners: In December, employment rose in the retail sector, which added 55,000 new jobs. Other strong gains came from the wholesale trade industry (15,000) and professional and business services (19,000). 
 
 Losers: But employment in the construction sector was down by 16,000. Some economists had predicted before the report that colder weather could be to blame. The federal government’s workforce continued to shrink, with 7,000 fewer positions last month from November. 
 
 Earnings and Work Week: The average work week for private employees edged down to 34.4 hours last month from the prior month. Meanwhile, average hourly earnings for private employees rose by 2 cents to $24.17 from a month earlier. Over the year, average hourly earnings have risen by 42 cents. ||||| WASHINGTON (MarketWatch) — The U.S. economy added 204,000 jobs in October, double Wall Street’s forecast, despite a government shutdown that was expected to put a damper on hiring. 
 
 Hiring for September and August was revised up by a combined 60,000 jobs, the Labor Department said Friday. The revised gains along with the big increase in hiring in October suggested the economy might have more strength than previously thought. 
 
 Economists surveyed by MarketWatch had expected an increase of 100,000 jobs in October. In recent action, U.S. stock markets rose, after investors decided that the strong employment report probably won’t spur the Federal Reserve to taper its bond-purchase program much sooner than expected. 
 
 Most economists expect the Fed to scale back its stimulus in early 2014, though the latest increased in jobs raises the odds of the bank moving in December. 
 
 “We believe that this report is significant enough to increase the probability of a December taper to around 35% if November’s economic data show a continuation of this trend,” predicted Doug Handler, chief U.S. economist of IHS Global Insight. 
 
 
 
 Bloomberg 
 
 The unemployment rate ticked up to 7.3% from 7.2% in what was likely a residue of the government shutdown. Federal workers were classified as unemployed under the government’s method for calculating the unemployment rate. Indeed, the number of people who said they were temporarily laid off soared by 448,000 in October, an unusually large increase that probably will revert back to normal in November. 
 
 The shutdown also contributed to a 720,000 decline in the size of the labor force, which tugged the participation rate down to 62.8% from 63.2%. That’s the fewest percentage of able-bodied people 16 or older looking for work since March 1978. 
 
 The largest slice of hiring in October took place at retailers, bars, restaurants and hotels — lower-paying establishments that tend to boost hiring temporarily for the holiday season. Those industries added a combined 97,000 jobs. 
 
 Yet almost every industry aside from government added workers, the Labor Department reported. Manufacturers added 19,000 positions in a reflection of rising demand for heavy-duty products. Professional and technical jobs rose by 21,000 and the steadily growing health-care sector hired 15,000 people as the nation prepares for the launch of President Obama’s health-care law. 
 
 “U.S. businesses largely shrugged off the government shutdown and ramped up hiring in October, suggesting more underlying strength in the U.S. economy than we thought,” said Sal Guatieri, a senior economist at BMO Capital Markets. 
 
 Government was one of the few losers. The number of federal jobs fell by 12,000, cutting government employment by 94,000 over the past year. 
 
 Still, the surprising increase in overall jobs raises questions about whether the shutdown distorted the government’s normal process of collecting data. Read: How believable is the jobs report? 
 
 Labor officials said the response rate to its establishment survey used to determine the number of jobs created was higher than normal because they had more time to collect responses. That could mean the preliminary number is more accurate than usual and won’t change as much when the report undergoes further revisions in the next two months. 
 
 Click to Play WSJ analysis: October jobs report Job creation accelerated in October as payrolls advanced by 204,000, exceeding economists' expectations. WSJ's economics team takes a look at the numbers and how they could impact Fed policy, plus, an update on the markets. Photo: Getty Images. 
 
 A more telling sign that the economy is showing greater resilience than most economists believed were the revisions for September and August. The number of new jobs created in September was raised to 163,000 from 148,000, while August’s figure was increased to 238,000 from 193,000. 
 
 The job gains in October and August were the second and third strongest performances of the year. Over the past three months, the U.S. has added an average of 202,000 jobs, the best stretch of hiring since the end of 2012 and early 2013. 
 
 More hiring, however, hasn’t translated into much faster wage growth, probably since the bulk of new jobs have been created in lower-wage industries. Average hourly wages edged up 2 cents to $24.10, putting the year-over-year increase at 2.2%. That’s just slightly faster than the rate of inflation. 
 
 The average workweek was unchanged at 34.4 hours. ||||| American employers added more workers to payrolls in October than forecast by economists, betting that the world’s largest economy would weather the impact of the federal government shutdown. 
 
 The addition of 204,000 workers followed a revised 163,000 gain in September that was larger than initially estimated, Labor Department figures showed today in Washington. The median forecast of 91 economists surveyed by Bloomberg called for an increase of 120,000. The jobless rate rose to 7.3 percent from an almost five-year low. 
 
 The figures indicate companies adhered to hiring plans with an outlook for stronger sales in the aftermath of the 16-day budget impasse and a debate over raising the nation’s debt ceiling. Treasuries fell on speculation the report will prompt the Federal Reserve to accelerate a withdrawal of stimulus. 
 
 “The government shutdown really didn’t have a material impact on employment,” said Brian Jones, senior U.S. economist at Societe Generale in New York, whose forecast for a payroll gain of 175,000 was the highest in the Bloomberg survey. “The labor market is actually quite healthy, regardless of what people may think. The economy is doing better.” 
 
 Treasuries lost the most in two months, pushing up the yield on the 10-year note 13 basis points, or 0.13 percentage point, to 2.74 percent at 9:32 a.m. in New York. The Standard & Poor’s 500 Index rose 0.2 percent to 1,750.53. 
 
 Photographer: Jeff Kowalsky/Bloomberg Employee Teron Stewart works on a Ford Motor Co. Focus at the company's Michigan... Read More Employee Teron Stewart works on a Ford Motor Co. Focus at the company's Michigan Assembly Plant in Wayne, Michigan, U.S., on Monday, Oct. 7, 2013. Close Close Open Photographer: Jeff Kowalsky/Bloomberg Employee Teron Stewart works on a Ford Motor Co. Focus at the company's Michigan Assembly Plant in Wayne, Michigan, U.S., on Monday, Oct. 7, 2013. 
 
 Factory Jobs 
 
 Payrolls increased at manufacturers by the most since February, retailers added about twice as many workers as the month before, and leisure and hospitality employment was the strongest in six months. 
 
 Animated Graphic: What the Jobs Report Really Means 
 
 Among those finding work was Blair Landen, 22, who was hired in October after her one-month internship at rehabilitation-product maker Saebo Inc. 
 
 She had been looking for positions since the spring, before her graduation from the University of North Carolina at Chapel Hill. When applying and interviewing for jobs yielded little, she started networking, creating a spreadsheet with about 70 contacts that eventually helped her find her current position. 
 
 “It was a very frustrating process,” said Landen, who now lives in Charlotte. “When you talk to 10 people, you might have one person who has a lead on a company that’s hiring right now - - maybe. It’s kind of like a never-ending cycle.” 
 
 Holiday Hiring 
 
 Retailers boosting hiring ahead of the holiday shopping season include Amazon.com Inc. The world’s largest online retailer is creating more than 70,000 full-time seasonal jobs in its U.S. fulfillment centers and expects to convert “thousands” of those positions to permanent roles after the season ends as it did in 2012, according to a statement. 
 
 Bloomberg survey estimates ranged from increases of 50,000 to 175,000. Revisions to prior reports added a total of 60,000 jobs to overall payrolls reports in the previous two months. The report, delayed by the shutdown, was originally slated for Nov. 1. 
 
 The difference between today’s outcome on payrolls and the average estimate of economists surveyed by Bloomberg was 3.4 times larger than the poll’s standard deviation, or the average divergence between what each economist forecast and the mean. That was the biggest surprise since April. 
 
 Jobless Rate 
 
 The unemployment rate, derived from a separate Labor Department survey of households rather than employers, was forecast to rise to 7.3 percent from September’s 7.2 percent, according to the Bloomberg survey median. The household figures showed more Americans dropped out of the labor force. 
 
 As many as 800,000 federal workers were furloughed during last month’s government shutdown. The Labor Department, in its survey of 60,000 households, extrapolated the effects of the impasse to arrive at the unemployment rate. Americans who weren’t working during the week spanning Oct. 6 to Oct. 12 were counted in the household survey as unemployed, even if they received, or anticipated getting, pay retroactively, based on a statement from the Bureau of Labor Statistics. 
 
 “You really want to see how the job market does in November before making any assessments about the underlying health of the job market,” said Ryan Sweet, a senior economist at Moody’s Analytics Inc. in West Chester, Pennsylvania, who correctly projected the rise in the unemployment rate to 7.3 percent. “There are a lot of things pushing and pulling on the October numbers.” 
 
 Pay Period 
 
 The separate survey of employers asked about the pay period that includes the 12th of the month, and anyone receiving pay for any part of the period was counted as part of the payroll tally, the Labor Department said. 
 
 The participation rate, which indicates the share of working-age people in the labor force, decreased to 62.8 percent, the lowest since March 1978, from 63.2 percent a month earlier. 
 
 Private employment, which excludes government agencies, rose 212,000 after a revised advance of 150,000. They were projected to rise by 125,000, the survey showed. 
 
 Factories added 19,000 workers in October, reflecting in part gains in the automobile industry. Retailers added 44,400 jobs and employment in the leisure industry climbed 53,000. 
 
 Government employment decreased by 8,000 in October as federal agencies cut payrolls. 
 
 Average hourly earnings increased by 0.1 percent to $24.10 in October from the prior month, and climbed 2.2 percent over the past 12 months. 
 
 The average work week for all private workers held at 34.4 hours in October. 
 
 Federal Contractors 
 
 Workers at America’s top federal contractors were among those affected by the lapse in appropriations. Lockheed Martin Corp., which had $36.9 billion in government contracts in 2012, put 2,400 workers on leave the second week of October. 
 
 URS Corp., a provider of engineering and construction services, furloughed about 3,000 employees, saying the total includes employees idled by the closing of a government facility where they work as well as those directed by U.S. officials to halt operations or cut staffing. 
 
 A report yesterday showed household purchases and business spending on equipment slowed in the third quarter, even as buildup in inventories unexpectedly boosted the pace of economic growth. 
 
 The 2.8 percent annualized gain in gross domestic product followed a 2.5 percent increase in the prior three months, Commerce Department figures showed. Final sales, which exclude unsold goods, rose 2 percent in the third quarter as consumer spending climbed at the slowest pace since 2011 and corporate investment fell. 
 
 In the three months ended in September, payrolls climbed 143,000 on average, less than the 195,000-a-month gain in the first half of 2013. Through September, the U.S. had recovered 7 million of the 8.7 million jobs lost as a result of the 18-month recession that ended in June 2009. 
 
 Fed policy makers said last week they needed to see more evidence the economy will continue to improve before they trim $85 billion in monthly purchases of Treasury and mortgage debt. Fiscal policy “is restraining economic growth,” the Federal Open Market Committee said Oct. 30 at the end of a two-day meeting in Washington. 
 
 To contact the reporter on this story: Victoria Stilwell in Washington at vstilwell1@bloomberg.net 
 
 To contact the editor responsible for this story: Christopher Wellisz at cwellisz@bloomberg.net
– A pretty dismal number on today's jobs report: Just 74,000 jobs were created in December, the smallest monthly increase in three years; economists had expected 200,000. And while the unemployment rate fell to 6.7% from 7.0%, it was "for all the wrong reasons," writes Steven Russolillo at the Wall Street Journal. Specifically, the big drop can be explained by the fact that the participation rate fell to a new low of 62.8%, meaning fewer people were looking for work. The AP reports that cold weather could have played a role in the poor numbers, noting that construction firms cut 16,000 jobs—the largest drop in 20 months. One silver lining from the report: November's new jobs were revised upward to 241,000 from 203,000. And Russolillo writes that the same could happen here. "Something doesn’t smell right. This jobs number is so far out of whack from the recent economic data that have come out. Jobs data have been getting stronger for months, not to mention improvements in growth, housing, and manufacturing figures. Don't be surprised if this report gets revised higher in the coming months."