Jobs Report: Wages Surged in December, Despite Relatively Modest Job Gains

Some 156,000 new jobs were created in December, according to the report published by the Bureau of Labor Statistics (BLS) on Friday.

However, 2016 average monthly job growth was 180,000, whereas 2015 average was 229,000 jobs a month. The average length of unemployment is still above its level from before the recession, and the percentage of unemployed people that are long-term unemployed – out of a job for more than 4 months – also remains higher than before the crisis.

During Barack Obama’s final weeks as president, another disappointing jobs report has been issued.

The PayScale Index, which measures the change in wages for employed USA workers, forecasts 3.2 percent growth in pay for Q1 2017.

The participation rate dropped to a 38-year low of 62.4 percent on Obama’s watch, in September 2015.

“The relatively stagnant participation rate signals that structural issues continue to face the U.S. labor market”, he said. The same is true for the EPOP for prime-age workers, which remained at 78.2 percent for the third consecutive month. Wages have been stagnant for much of the post-recession recovery, but they gained some momentum past year as the jobless rate dropped and employers began to fall under pressure to offer higher wages. Barclays Plc economists Rob Martin and Michael Gapen pointed out the more modest 2.5 percent year-over-year December gain in earnings for production and non-supervisory workers, which exclude managers.

Of the various employment sectors, health care and social assistance saw the greatest growth in employment.

And there’s a case for saying that wider measures of labour market problems (people who want to work longer hours or have given up looking for work and are not counted as unemployed) are still somewhat on the high side.

Presaging the December unemployment statistic was a contraction in the number of Americans filing for jobless benefits for the last week.

Though weaker than expected, last month’s headline figures are consistent with a labor market nearing full employment. It has even managed to reach close to full employment. The October report was revised downward, to 135,000 from 142,000, but the overall change for the two months was still positive: 19,000 more jobs than previously reported.

“With promises of lower taxes and less regulation, small business owners are becoming more enthusiastic about investing in their business”, said NFIB Chief Economist William Dunkelberg. Having gained +57K jobs over the prior three months, however, construction swung back to a slight decline (-3K), accompanied by marked deceleration in y/y growth, to 1.5%. A recent ADP study found that 80 percent of employers believe their top management challenges stem from the shortage of skilled workers.

There were 5,598,000 Americans working part-time in December who would rather have a full-time job but cited economic reasons for not having such employment.