The government says the guy in the red suit came through for job seekers last month, as employers added 292,000 jobs to their payrolls – way better than analysts were expecting.
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“The broad economy continues to recover steadily”, commented James Glassman, head economist with JPMorgan Chase commercial banking in NY in a note published on december 29. The temp penetration rate – temp jobs as a percent of total nonfarm jobs – increased to 2.06% in December compared to 2.05% in November.
Average non-farm private wages were basically flat at $25.24, a drop of one percent.
With the Fed focused on inflation, wage growth is under scrutiny. Economists surveyed by CNNMoney predicted 211,000 jobs would be added.
Employment increased last month in professional and business services (+73,000 jobs), construction (+45,000 jobs), healthcare (+39,000 jobs), food services and drinking places (+37,000 jobs), and transportation and warehousing (+23,000 jobs). The mining industry cut 8,000 jobs in December. The U.S. added an average of 284,000 new jobs to the labor market in October, November and December.
Many more people need jobs than the low unemployment rate would suggest. Steady hiring would reduce the supply of people seeking jobs, which could lead to higher wages and possibly lift inflation closer to the Fed’s 2 per cent target.
The Federal Reserve’s optimism about the US labor market contributed to its December decision to raise its benchmark interest rate for the first time in almost a decade.
Hourly earnings declined marginally in the month, and were up just 2.5% from a year ago.
A solid employment report could soothe fears over the economy’s health by showing recent weakness largely contained in the manufacturing and export-oriented sectors, which have been hit by a strong dollar and anemic global demand. Employment in mining shrank by 8,000 in December and the industry has posted job losses every month since December 2014. The World Bank said this week that Mexico and emerging markets in Central America should fare better than the rest of South America due to their proximity to the healthier US economy.
Also being watched closely is the labour force participation rate, or the share of working-age Americans who are employed or at least looking for a job.
Wage growth remains tepid compared to before the 2007-09 recession, but an upward trend is now more clearly coming into view, supporting the outlook within the Fed that four quarter-point rate hikes could be needed this year.
The number of people unemployed for six months or longer fell by over 600,000 previous year too. “Still, with such a strong momentum in employment growth, the unemployment rate is likely to continue dropping in 2016”. Over the course of the year, average hourly earnings have risen by 2.5 percent.
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YDSTIE: While some US exporters could be hurt, Martin thinks the money USA consumers save from lower prices for imported Chinese goods will boost economic activity and more than offset any drag on USA growth. The average workweek was unchanged at 34.5 hours.
