FXstreet.com (Barcelona) - December's non-farm payroll figures have gone further , in the negative side, than the most pessimistic forecasts with employment levels growing well below expectations, and the unemployment level picking up, putting an end to three months of strong work creation.

Non farm payrolls have increased by 18,000 in December, after a 115,000 increase posted in November, revised up from the initially reported 94.000 increase, and a rise of 159,000 in October. In the whole 2007 payroll employment increased by 1.3 million, while in 2006 the increase was 2.3 million. Market analysts expected an increase of around 50,000 new payrolls.

It was the public sector to keep payrolls in positive territory, according to Ian Shepherdson , Chief U.S. Economist at High Frequency Economics, Ltd: Payrolls were kept in positive territory only by the public sector; private jobs fell 13K, the first dip since July 2003. Take out the 44K in private education and health and core private business sector payrolls dropped 57K.

Unemployment rate has risen to 5.0% from 4.7% on the previous month, while the average workweek remains unchanged at 33.8 hours.

Average hourly earnings have increased by 7 cents, or 0.4% to 17,71 in seasonally adjusted terms, while from December 2006, hourly earnings have increased 3.7%.

Overall, according to Sheperdson, besides the weak data December's employment figures leave a gloomy outlook on US economy: very soft, and the rise in claims and drop in help wanted implies further declines ahead. The rise in unemployment is partly a rebound from the fluky Nov household survey numbers but the trend is clear. The Fed has to respond.