December brings cheer for 292000 more USA workers

Nonfarm payroll employment rose by 292,000 jobs in December, according to the latest figures from the Bureau of Labor Statistics.

Most business areas added jobs, but the big winners in December were construction, health care and business services. The labor force participation rate was little changed in December, at 62.6%.

American employers added a strong 292,000 jobs in December, suggesting that the US economy is so far defying global trends and growing at a solid pace. “We ought to see a broader pickup in wage growth this year”. For months, USA employers have steadily added jobs even as global growth has flagged and financial markets have sunk.

But while investors fret about hits to corporate profits from the Chinese slump, USA workers have reason to celebrate. That makes 2015 the second-best year for hiring since 1999, after 2014’s gain of 3.2 million jobs. But if the Fed is right that inflation will return to its target of 2 percent, wages will have to grow substantially faster than 2 percent to achieve satisfactory real (inflation-adjusted) wage growth. Average hourly earnings – the wage measure reported in the monthly jobs report – have grown at about 2 percent a year for several years (see second chart). The U.S. added an average of 284,000 new jobs to the labor market in October, November and December. This is actually probably a good number in terms of the market because it showed we’re still cranking despite China, but we’re not so hot that the Fed has to come here in March.

As has been the case in recent months, the most important figure in the report may be related to wage growth. The black unemployment rate fell to 8.3% in December from 9.4% in November.

Expanding employment is also expected in the nation’s construction sector, according to one contractor group, and that translates into more building materials that will need truck transportation. Economists surveyed by CNNMoney predicted 211,000 jobs would be added.

Mark Zandi, chief economist at Moody’s, says strong consumer spending should propel growth in 2016, even as overseas economies such as China and Europe remain weak.

The U.S. labor market remains on fire.

In the wake of soft reports on manufacturing, construction spending and export growth, economists this week slashed their fourth-quarter growth estimates by as much a full percentage point to as low as a 0.4 percent annual rate. Over the year, those industries added 655,000, 605,000, and 419,000 jobs in 2015. That’s still about 2 percentage points below prerecession levels. Professional and business services, which includes accountants, engineers, and architects as well as lower-paid temporary workers, added 73,000 positions. There’s good reason to believe that the jobless rate can go lower still, as long as growth proceeds at a modest pace and especially if hiring continues at its recent pace. For years, US producers of commodities have been counting on China’s explosive expansion to absorb raw materials, such as oil, iron ore, copper and timber.