16 June 2019

Employers Added 292,000 Jobs in December

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The labor market ended 2015 on a roll as employers added a blockbuster 292,000 jobs last month, underscoring that the U.S. economy remains on solid footing despite weakness in China and this week’s brutal market selloff. The unemployment rate was unchanged at 5%, the Labor Department said Friday. Economists surveyed by Bloomberg expected 200,000 job gains, according to their median forecast. Businesses added 275,000 jobs, led by professional and business services, healthcare and construction.. Federal, state and local governments added 17,000. In another positive sign, job gains for October and November were revised up by a total 50,000. October’s was upgraded to 307,000 from 298,000, and November’s, to 252,000 from 211,000.

Many economists expected the December tally to be somewhat inflated by unusually warm weather that could have spurred hiring by construction firms, restaurants and retailers. Construction, in fact, added 45,000 jobs last month and 128,000 in a fourth quarter characterized by generally balmy temperatures across much of the country. And restaurants and bars added 37,000 in December. Still, the economy gained a healthy average of 221,000 jobs a month in 2015. In 2014, 260,000 new jobs a month were created, though that marked a 15-year high.

At the same time, manufacturers and oil companies shed thousands of jobs last year and global forces continue to buffet those industries. A weak overseas economy and strong dollar that makes U.S. exports more expensive for foreign buyers has hammered factories already reeling from plunging oil prices that have curtailed energy projects. The mining industry cut 8,000 jobs in December. Manufacturers added 8,000 in a possible the sector will at least be more stable this year. As a result of the headwinds, many analysts estimate the economy grew just above 1% in the fourth quarter, less than half the average pace in the 6 1/2 year old recovery.

But while business investment has suffered, American consumers have been buoyed by rising home prices, strong job growth, cheap gasoline and reduce household debt. And since consumer spending makes up more than two thirds of economic activity, it, along with the recovering housing market, underpinned last year's sturdy job growth. Besides the strong gains by construction companies and eateries, professional and business services added 73,000 jobs last month; healthcare, 39,000; and transportation and warehousing, 23,000.

One lingering cause for concern is that average hourly earnings rose just 1 cent to $25.24, and are up 2.5% the past year. While that’s faster than the modest 2% or so pace so far in the recovery, the gain was inflated by an unusual drop in pay in December 2014.The Federal Reserve, which raised interest rates last month for the first time in nearly a decade, is looking for a pickup in wage growth as a sign of accelerating inflation, providing policymakers more confidence to continue to hike rates in 2016.

Economists had said a weak showing in December could signal that the global turmoil was shaking business confidence and hiring. A similar scenario appeared to play out in August and September, when payroll growth slumped before rebounding strongly the next two months. Back then, reports about China’s economic slowdown sent stocks tumbling, as they have in recent days.

Other labor-market indicators, though, have been encouraging. Payroll processor ADP estimated that businesses added a better-than-expected 257,000 jobs in December and an index of service-sector activity showed a pickup in hiring. Initial jobless claims, a reliable barometer of layoffs, hovers at prerecession levels. At the same time, measures of manufacturing employment, online job ads and auto sales declined last month, leading some analysts to predict that job growth slowed.

Click here to access the full article on USA Today.

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