Mediocre job growth points to slow grind for US economy

US employers kept their pace of hiring steady in December, falling short of the levels needed to bring down a still lofty unemployment rate and pointing to lackluster economic growth in 2013.

Other data today gave stronger signals on the health of the economy, with the US service sector activity expanding the most in 10 months.

Payrolls, excluding farm jobs, grew by 155,000 last month, the Labour Department said. That was a touch more than analysts' expectations and only slightly below the revised gain of 161,000 reported for November.

The jobless rate was steady at 7.8 percent.

While firms kept on hiring despite the uncertainties raised by a budget stand-off in Washington, the report reinforced expectations of 2 percent economic growth this year.

Such slow growth is unlikely to quickly bring down the unemployment rate and probably will not make the U.S. Federal Reserve rethink its stimulus plan anytime soon despite growing unease among some policymakers over its bond-buying program.

"The US economy is just muddling through," said Tom di Galoma, managing director at Navigate Advisors in Stamford, Connecticut.

The Labour Department raised its estimate for unemployment in November by a tenth of a point to 7.8 percent.