Ignoring the economic troubles in the rest of the world, the U.S. added another large batch of new jobs in December to conclude its best year of hiring since 1999.
The Labor Department said Friday that employers took on 252,000 net new workers last month, after adding an upwardly revised 353,000 people to their payrolls in November.
The nation’s unemployment rate fell by a larger-than-expected 0.2 percentage points to 5.6 percent in December, but that was partly because the labor force shrank last month. Still, the latest jobless figure is the lowest since June 2008 and is down from 6.7 percent a year earlier.
Friday’s report, however, did not bring encouraging news on ordinary workers’ pay. Average hourly earnings for all private-sector workers fell 5 cents to $24.57, almost completely reversing the 6-cent gain in November that had raised hopes of a long-anticipated rise in pay. Average hourly wages have hardly budged in recent years; last month’s pay was up 1.7 percent from a year earlier, a tad above the inflation rate.
Even so, job growth more recently has included more higher-paying jobs. Last month, employment gains were led by professional services, which include architects and computer programmers. There were strong gains in construction, which also pays more than average, followed by food services. Businesses in health care and manufacturing also beefed up their payrolls.
If the latest job trends continue another month or two, it could prompt the Federal Reserve to move up the timing of an increase in its benchmark interest rate, which has been pinned near zero since December 2008 to boost economic growth through the recession and recovery. Wall Street is generally expecting the central bank to begin lifting its so-called federal funds rate, which influences mortgages and other borrowing costs, at its June meeting, but some Fed officials and analysts have argued for an earlier rate hike.
That decision will hinge in good part on the Fed policy committee’s assessment of the job market. Wage growth has been lagging since the recovery, which many have taken as an indication that there is still considerable “slack” in the economy — that is, a lot of available and hirable unemployed workers. Besides the lagging growth in earnings, other data such as figures indicating a high share of long-term unemployed and workers stuck in part-time jobs, plus a relatively low voluntary quit rate of employees, suggest that the job market is weaker than the unemployment rate trends might indicate.
At the same time, layoffs have receded to pre-recession lows, and consumer and business confidence has surged, in part boosted by the plunge in oil prices and the still-high, if volatile, stock market.
The December job gains, while preliminary, came amid a shaky global economy in which Europe and Japan remain stagnant while China and other large developing nations are showing slowing growth.
With last month’s hiring, the U.S. added a net 2.95 million jobs for all of last year. That compares with 2.1 million to 2.3 million in each of the prior three years. Last year marked the strongest job growth since the economy added 3.2 million jobs in 1999.