U.S. adds 292000 jobs in December

“Obviously the 292,000 number that came in is very strong. This will likely firm the market’s expectation that the Fed will proceed with their gradual increase in the Fed Funds target – most likely with the next step in March”, said Doug Duncan, chief economist with Fannie Mae. 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 USA economy. Construction showed solid growth for the third straight month, gaining 45,000 jobs in December, the bureau said.

The dollar has climbed about 10 percent in value in the past year compared with overseas currencies. Business services, healthcare and the service industry were the most positively impacted by the job growth. Those layoffs may continue if oil prices stay low.

American employers added 292,000 jobs in December. Health care employment rose by 39,000, with most of the increase occurring in ambulatory health care services (+23,000) and hospitals (+12,000).

Manufacturing, however, changed little in December, although non-durable manufacturing gained 14,000 jobs, the BLS said. October’s gain was raised to 307,000 from 298,000, marking the biggest increase of 2015.

Even as demand for workers grew, average hourly pay actually slipped a penny in December to $25.24 an hour.

The robust employment data helped soothe fears about the economy’s health, and suggested recent weakness would largely be contained to the manufacturing and export-oriented sectors, which have been hit by a strong dollar and anemic global demand. “If President Obama wants to make a real difference during his past year in office, he’ll use his final State of the Union Address to propose new ways to break down barriers to job creation and encourage economic growth”. These numbers have fallen over the course of the recovery, but the Labor Department’s broadest measure of unemployment and underemployment (U-6), which was 9.9 percent in November, remains elevated compared with past recoveries (see first chart). While the rate increased one-tenth of a percentage point to 62.6 per cent in December, it remains near four-decade lows. This is consistent with the 2.5 percent increase over the previous year. A similar scenario appeared to play out in August and September, when payroll growth slumped before rebounding strongly the next two months. Lower stock prices may cause American consumers to spend less.

The retail sales shift puts a premium on managing the distribution of goods from warehouses to homes, requires the shipment of high volumes of small packages that require more labor in shipping than traditional brick-and-mortar retail models. Either some of those millions of Americans who dropped out of the workforce will return, allowing continued rapid job growth.

On a more constructive note, analysts at Barclays said Friday’s job figures suggested labor market momentum remained “firmly” in place.