US continues growth, adds 292000 jobs in December

USA jobs growth remained solid in December as the economy added 292,000 jobs, beating expectations.

This month the economy added 292,000 total non-farm (TNF) jobs, slightly above the 221,000 monthly average for 2015. On the year, the construction industry added 263,000 jobs, compared with a gain of 338,000 in 2014.

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). Average wages declined by 1 cent to $25.24 per hour, but have increased on average 2.5 percent over the past year, the Labor Department reported. But a healthy growth rate for wages would be “in the 3-4 percent range”, writes The Wall Street Journal.

In the final three months of 2015, the USA added an average of 284,000 jobs.

The strong hiring underscores the resilience of the United States at a time of slow global growth and financial turmoil.

The jobs data initially strengthened the dollar and boosted USA stocks, but both slipped back later in the day, with the dollar roughly flat at $1.0925 per euro and the S&P 500 losing 1.1 percent. In December, it gave its vote of confidence by raising its key interest rate for the first time in almost a decade. Even before the market slump, US manufacturers were feeling the pinch: Data released Monday showed the factory sector contracting sharply at the end of 2015.

There are concerns that persistently low participation could hamper job growth as the supply pool of workers shrinks, unless a pick-up in earnings entices more Americans to return to the labour force.

While many labor market indicators have improved during the recovery, wage growth has been disappointing.

The number of long-term unemployed was unchanged at 2.1 million people last month.

A resilient US economy will probably help some other countries by drawing in more imports, especially as a higher-valued dollar holds down the prices of foreign goods. Despite strong job creation and a rapidly falling unemployment rate, wages weren’t rising accordingly. Average hourly earnings in December were unchanged from the prior month and increased 2.5 per cent from a year earlier. “It grew less than 2 percent [for the month], which is much lower than the rents or home prices”. Whether it’s how to raise interest rates or rejecting the job-killing [Trans-Pacific Partnership], we must ensure that policies aren’t pushed that benefit giant corporations at the expense of working people.

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.

“While it is a strong report overall, it is not so positive as to overshadow the troubling developments in China recently, and the Fed will likely need more ammunition before it goes authorizes another rate hike”, said National Association of Federal Credit Unions Chief Economist Curt Long.

Starting January 2014, I dropped the Birth/Death Model charts from this report. “Whether they will be hiking in March will be dependent on financial market conditions and moving core inflation toward the 2 percent target”.