- Employment gains revised higher for October and November
- Year-over-year hourly earnings advance was less than forecast
America’s labor-market juggernaut continued to roll unabated at the end of 2015.
Employers in December added 292,000 workers, exceeding the highest estimate in a Bloomberg survey, and payrolls for the previous two months were revised higher, a Labor Department report showed on Friday. The jobless rate held at 5 percent as people entering the labor force found work. At the same time, worker pay disappointed, rising less than forecast from a year earlier.
Stocks and the dollar climbed after the report showed durable strength in the job market that indicates employers were optimistic about the economy’s prospects just before the recent rout in global financial markets. Federal Reserve policy makers, who raised interest rates in December for the first time in almost a decade and signaled further moves would be gradual, are counting on tighter labor conditions to lead to a pickup in wages and inflation.
“This should calm some fears about the U.S. economy losing growth momentum,” said Michael Feroli, chief U.S. economist at JPMorgan Chase & Co. in New York and a former Fed economist. It “also validates the sense that there’s no rush to tighten again because we’re not seeing much wage pressure.”
The December advance exceeded the highest forecast in a Bloomberg survey and followed a 252,000 increase in November that was stronger than the previously estimated 211,000. The median forecast in a Bloomberg survey called for 200,000. The readings capped the second-best year for hiring since 1999.
The December job gains, which were probably helped by mild winter weather across much of the country, were led by temporary-help services, health care, transportation and construction.
Labor Department revisions to prior reports added a total of 50,000 jobs to payrolls in November and October. For all of 2015, employment climbed by 2.65 million after a 3.1 million gain in 2014, for the best back-to-back years since 1998-99.
December payroll estimates of 92 economists in the Bloomberg survey ranged from gains of 135,000 to 250,000. The unemployment rate, which is derived from a separate survey of households, matched the median forecast.
The unemployment rate for all of 2015 averaged 5.3 percent, the best since 2007, when it was 4.6 percent.
While employers continue to aggressively add to headcounts, worker pay has yet to show a sustainable pickup. Average hourly earnings in December were unchanged from the prior month and increased 2.5 percent from a year earlier. The median forecast called for a 2.7 percent year-over-year gain.
The year-to-year advance, which was the biggest since October, was primarily due to an easy comparison with December 2014, when earnings fell 0.2 percent from the previous month. This so-called base effect will probably result in some payback with the January employment report when earnings come up against a strong January 2015 comparison.
The average workweek for all workers held in December at 34.5 hours.
Another caveat about the wage and hours results: The Bureau of Labor Statistics found a processing error in the data from March 2006 through February 2009 and will issue corrected figures on Feb. 5.
The participation rate, which shows the share of working-age people in the labor force, increased to a four-month high of 62.6 percent from 62.5 percent.
Among measures of labor-market slack, the number of Americans who are working part time though would rather have a full time position, or the measure known as part-time for economic reasons, eased to 6.02 million from 6.09 million.
The underemployment rate -- which includes part-time workers who’d prefer a full-time position and people who want to work but have given up looking -- held at 9.9 percent.
Employment over the final three months of 2015 increased 284,000 on average, the most since January 2015.
Hiring gains last month were broad-based, with construction adding 45,000 jobs, health-care providers taking on 52,600 and temporary help services boosting headcounts by 34,400. Factories even added the most jobs -- 8,000 -- in five months.
Minutes of the Fed’s December meeting, when policy makers boosted their target rate for federal funds, showed participants acknowledged the improvement in labor market conditions. Many judged it as “substantial.”
“Members agreed that a range of recent labor market indicators, including ongoing job gains and declining unemployment, showed further improvement and confirmed that underutilization of labor resources had diminished appreciably since early this year,” according to the minutes, released on Wednesday. At the same time, Fed officials said there was room for slack to be absorbed and signaled further hikes in interest rates would occur gradually.
On Thursday, the Standard & Poor’s 500 Index capped its worst-ever four-day start to a year as turmoil in China spread around the world. Selling in global equities began in China, where shares fell 7 percent after the central bank weakened the yuan an eighth day. Crude settled at a 12-year low, and copper dipped below $2 for the first time since 2009.