Which reminds us, the labor participation rate for December clocked in at 62.6 percent – up from its 2015 low of 62.4 percent but still down for the year. That’s a very small step, and policymakers didn’t claim that the labor market was fully healed.
Advertisement
The central bank cited “considerable improvement” in the labor market during 2015 when it acted last month to raise its benchmark interest rate for the first time in almost a decade. The U.S. could also get hurt if the global economy takes a turn for the worse, particularly if China is hobbled.
Moreover, initial estimates for job growth for November and October were revised upward 50,000 to a total of 559,000.
Unemployment remained steady at 5 percent, where it has been for the past three months (at its lowest rate in more than seven years), and average hourly earnings increased by 2.5 percent.
In the only blemish in the December report, wages remained essentially unchanged in December at $25.34 an hour.
Wage growth will come under scrutiny this year.
Manufacturing added 30,000 jobs previous year, a marked decline from 2014.
Energy jobs, however, continued to fall as the collapse in oil prices kept up pressure on the industry. The Dow Jones industrial average fell about 1 percent, losing 167.65 to 16,346.45. USA investors feared China’s problems could threaten growth here, too.
Prior to the release of the December jobs report, analysts had suggested a number of important sectors likely benefitted from the unseasonably warm weather late past year, notably the construction industry and the large services sector, especially in the areas of leisure and hospitality. But the modest wage growth becomes a concern for Federal Reserve.
Beth Ann Bovino, an economist at Standard & Poor’s Ratings Services, said the strong pace of wage growth and job creation bolstered the case for four rate increases. Job gains occurred among specialty trade contractors (+29,000) and in construction of buildings (+10,000). “The evidence for this process still needs to be broadly confirmed, however, as average hourly earnings gains changed little this month and are running at a reasonable, but not impressive 2.5 percent year-over-year”.
“Markets are desperate for good news, and now have it, but it comes with a caveat because better employment growth means the Fed will raise rates faster….”
The United States gained nearly 300,000 new jobs in December, capping off the fifth straight year in which employment grew by at least 2 million to power a steadily growing economy.
“The economy is reflected most strongly in the jobs numbers – and it’s doing OK, maybe better than OK”, said David Berson, chief economist at Nationwide Insurance.
Advertisement
Theoretically the participation rate should start to move higher as unemployment drops. Food services and bars added 37,000 jobs in December, transportation and warehousing added 23,000, film and sound recording industries added 15,000 jobs.
