A record average of 93,671,000 Americans 16 or older did not participate in the nation’s labor force in calendar year 2015, and the average labor force participation rate was 62.7 percent, a 38-year low, according to data released Friday from the Bureau of Labor Statistics (BLS). Among Wall Street analysts, the consensus was the economy would add some 200,000 jobs in the last month of 2015.
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But there was still little improvement in wages, or the number of people forced to work part time because they can not find full-time jobs, that would confirm that the employment sector has fully recovered more than six years after the Great Recession.
Manufacturing added 8,000 jobs last month and unusually warm weather boosted construction payrolls, which increased by 45,000.
A steady or even increased unemployment rate, combined with a robust added jobs number, is especially heartening news in the current job market conditions.
Last month’s biggest job gains were in heath care (39,000), food services and drinking places (37,000) and transportation and warehousing (23,000).
Wages were flat in December compared with the prior month and rose 2.5% against the prior year. The economy’s third-quarter growth clocked in at a 2.1 percent, after growing at almost 4 percent in the previous quarter, though disposable income increased 3.9 percent in the third quarter after a smaller increase of 2.6 percent in the second.
On Thursday, the Standard & Poor’s 500 Index capped its worst-ever four-day start to a year as turmoil in China spread around the world. But we don’t actually know what the lowest sustainable unemployment rate is, and with interest rates still very low, the Fed has more room to raise rates to rein in unexpected inflation than it has to lower them in the face of unexpected job market weakness. Yet it makes up just 10 percent of the US economy and oil and gas drilling even less. Average hours worked and wages ordinarily rise in the face of strong job growth, as a tightening labor market forces employers to increase pay or get more work out of existing workers.
In spite of continued job growth in the December jobs numbers, broad-based wage growth continues to elude workers, and average wages fell slightly. For all of 2015, payrolls climbed by 2.65 million after 3.1 million in 2014 for the best back-to-back years for hiring since 1998-99.
With the Fed focused on inflation, wage growth is under scrutiny.
“We will be watching the next few reports closely to see which of these trends dominate, but the labor market is starting 2016 on a positive note”, Mr. Madowitz wrote. It means that 50,000 more jobs were added in October and November. “It grew less than 2 percent [for the month], which is much lower than the rents or home prices”. Unemployment remained largely unchanged at 5 percent.
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The solid employment data should soothe fears over the economy’s health and suggests the recent weakness in activity is mostly limited to the manufacturing and export-oriented sectors, which have been hit by a strong dollar.DXY and anemic global demand. The average hourly earnings of all private-sector workers fell by 1 cent in December to $25.24. Initial jobless claims, a reliable barometer of layoffs, hovers at prerecession levels.
