Unemployment Rate Rises to 5%

The unemployment rate rose to a two-year high of 5% in December from 4.7% in November, while payrolls rose by 18,000 jobs, the smallest gain since August, the Labor Department said Friday.

The jobs gain, which followed an increase of 115,000 in November, was well below economists’ forecasts of 70,000 jobs. The unemployment rate was higher than expected, and .4% above the 2007 average, Bloomberg reported.

Manufacturers’ payrolls fell by 31,000, following a 13,000 downturn in November, Labor reported.

Service industries added 93,000 workers in December, down from a gain of 160,000 the previous month.

The unemployment-rate gauge is based on a survey of households. The number of payroll jobs added is determined by a separate survey of business and government establishments.