More Americans started looking for jobs and succeeded in finding them.
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An analysis of long-term changes affecting the labour market released this week by the Federal Reserve Bank of St. Louis focused on how automation and offshoring were continuing to reduce the number of middle-skill jobs, like those in manufacturing and production. The employment-to-population ratio increased to 59.5 percent last month, its highest level since May 2009, from 59.4 percent in November. Job gains occurred among specialty trade contractors (+29,000) and in construction of buildings (+10,000). It took total jobs created during the year to 2.65 million, the second-best year, after 2014, since the 1990s.
The BLS also revised upward on Friday the change in total nonfarm payroll employment for October and November.
US stocks rose modestly after the jobs report was issued, with the Dow Jones industrial average up about 48 points after falling sharply all week. This month we saw the participation rate tick-up and if employment continues to grow that this rapid pace, we will likely see more workers coming off the sidelines and back into the labor force, leaving the unemployment rate steady for the foreseeable future. Fourth-quarter GDP growth estimates now range from as low as a 0.4 percent annual rate to as high as a 1.1 percent pace. For the full year, the US added only 30,000 manufacturing jobs, he said.
The private service sector created the lion’s share with 230,000 new jobs, with education and health services adding 52,600 jobs and temporary-help services contributing 34,400 jobs. That means more business for the ports of Los Angeles and Long Beach.
The news comes during a week of turmoil in the global stock markets. 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. Delivery companies typically begin staffing up for these jobs in October, peaking in December, but in recent years we’ve seen that seasonal pattern become much larger.
The monthly report shows job growth continues to be positive while unemployment stays the same.
Even so, the overall picture was similar to that of the members of the Fed’s policy body, the Federal Open Market Committee, when they decided on December 16 that the economy was resilient enough to handle a quarter percentage point increase in the near-zero federal funds rate, which should increase borrowing rates for consumers and businesses.
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Hourly earnings declined marginally in the month, and were up just 2.5% from a year ago. But the problem is these headlining numbers are not felt by most Americans going to work and putting a bit away in their retirement accounts. 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 sector shed 8,000 jobs in December, though that was an improvement over the 11,000 positions lost the previous month.
