WASHINGTON (AFX) - U.S. unemployment data for December points toward a sharp deceleration of economic growth despite coming in within expectations, Wall Street economists said. They are looking for economic growth of 2 pct or below for the fourth quarter of 2000 and first quarter of 2001 compared with a growth of between 5-6 pct in the same period last year. "Although the economy is still growing, we see a relatively sharp deceleration compared to the same period last year," according to Kathleen Stephenson, economist at CSFB. Carol Stone, deputy chief economist at Numura Securities, agreed: "We are looking for the economy to grow, but very slowly. We now have two quarters below 2 pct and it would not take much for a swing in particular items, such as inventories, to push the growth rate further down. Presently we have a soft landing but we are certainly flirting with recessionary conditions." In December, total nonfarm payroll employment rose by 105,000 according to the Labor Department. However, Ian Shepherdson, chief U.S. economist at High Frequency Economics, pointed out that payrolls are weaker than expected because government jobs rose 56,000. The unemployment rate remained unchanged at 4.0 pct from November. Economists said that the sharp rise in unemployment in the manufacturing and construction sectors is likely to spill over into the first months of 2001 and may affect employment in the transport sector as well. "If manufacturing continues to slacken, then transport, in particular trucking, will be affected as there will not be much to transport if the manufacturing sector slows," Stone added. Stephenson said labour market conditions will continue to slow in the manufacturing sector, following the planned lay-offs at General Motor Corp. Ian Shepherdson of High Frequency Economics expects job losses in manufacturing to continue through the first half of the current year. The continuing slowdown in private sector job growth was also of concern to economists. Private sector job growth in the fourth quarter averaged 84,000 per month, only about half of the monthly average growth in the first nine months of the year. While the unemployment data was within their expectations, economists said they were mildly surprised by the rise in hourly earnings, which rose 0.4 pct in December, and were up 4.2 pct year-on-year. However, Stone explained that this sizeable increase was mainly due to a rise in wages in the finance, insurance and real-estate sectors, "reflecting end-of-year bonuses."