U.S. Economy Added A Robust 292000 Jobs In December

The U.S. economy finished the year with a hiring spree, adding 292,000 new jobs, as the unemployment rate held steady at 5 percent.

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 Labor Department said employers added 292,000 jobs in December.

Oilfield services provider Schlumberger last month announced another round of job cuts in addition to 20,000 lay-offs already reported in 2015. Healthy consumer spending, modest gains in home construction and an uptick in government spending should offset drags from overseas and bolster growth this year, economists said.

While average hourly earnings were flat in December, they were sharply higher than a year earlier and rose at a 2.5 percent annual rate in the fourth quarter, according to Reuters calculations of Labor Department data released on Friday. Even with the strong showing at year end, payroll growth was softer last year than in 2014, with 2.65 million jobs created compared with 3.1 million.

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.

The U.S. legal sector gained 1,200 jobs in December, as the overall national employment situation brightened.

Sluggish growth in Europe and a slowing economy in China – together with a strengthening dollar, which hurts exports – have roiled markets and dragged on US manufacturers.

The Fed based its December rate hike decision on the underlying strength of the US labor market, and Friday’s report suggests that its confidence was not misplaced. Chinese stocks plunged this week, while the S&P 500 and Dow Jones Industrial average had their worst-ever start to a year. We need to see strong and sustained wage growth, above 3.5 percent, before it’s safe to say we are at full employment and the Fed could act to slow the economy. Raising rates in the first quarter would make four increases over the course of the year more plausible.

The jobs report contained no signs of inflation. The reason why more jobs were added but unemployment didn’t go down is that more people are entering the labor force to look for jobs.

Last month, the percentage of adults with jobs rose for a second straight month, though it remains below pre-recession levels.

USA manufacturers added 30,000 jobs a year ago, a marked decline from 2014. 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. In fact they actually fell by a penny – from $25.25 to $25.24 per hour.