Strange behavior from a 4017 Johnson counter
TANSTAAFL effect, quite  probably.

(1) Remove the LED from pin 12 and see if it works OK. Pin 12 is not meant to be LED loaded and has complex feedback connections inside the IC. Yes, it is shown as buffered, but ... 

4017 datasheet here



(2) This does not appear to be the problem in your case, but if using a switch as a clock it is a very very very good idea to use the A version which has a Scmitt trigger input. My reasonably xtensive experienc with this IC using a switch as a clock source is that the Schmitt version is needed. YMMV but may not. The downside is that, LED drive wise, the Schmitt version can not pull the skin off a rice pudding. A look at the data sheet shows that the one you have is as bad or worse. Guaranteed low drive at Vcc=5V is about 1.4 mA at 2.5V. Not impressive.