The unemployment rate in the United States jumped to a two-year high, as hiring slowed more than forecast in December, Bloomberg reported.

Payrolls rose by 18,000, the smallest increase since August 2003 and far behind the 115,000 jump in November, according to the Labor Department. The jobless rate rose to 5 percent from 4.7 percent in November and 4.5 percent in the year-ago period.

Economists surveyed by Bloomberg had expected a 70,000 increase in payrolls, according to the median of 74 estimates. The December job gain puts the total payroll increase for 2007 at 1.33 million, the smallest rise in four years.

Service industries, including banks, insurance companies and restaurants, added 93,000 workers last month and government payrolls rose by 31,000. Meanwhile, retail employment fell by 24,300 and manufacturing employment decreased by 31,000.