US Job Gains In December Show Solid Labor Market
WASHINGTON, Jan 6, (UrduPoint / Pakistan Point News - 06th Jan, 2017 ) - US job growth slowed in the final month of 2016, but low unemployment and millions of jobs added last year point to a robust labor market President-elect Donald Trump will inherit.
The country added 156,000 jobs in December, which on its face was disappointing since it fell short of the consensus forecast for 175,000 new positions. However, the increase for November was revised up to 204,000 from the initial report of 178,000.
The big revision brings the average non-farm payroll gains for the past three months to 165,000. The figures provide the final official snapshot of the US labor market during Barack Obama's presidency, confirming the relative health of the economy he will hand over to Trump later this month.
In all of 2016, the United States added 2.2 million jobs, down from the 2.7 million in 2015. Some 10.5 million have been added since December 2008, just before Obama took office amid the global financial crisis.
The jobless rate nudged up to 4.7 percent in December, reversing some of the sudden drop in November, when unemployment fell to 4.6 percent, its lowest level in nearly a decade. Unemployment now is less than half the rate when it peaked at 10 percent in October 2009.
It was 7.3 percent in December 2008. - Wages rising - ================ Another highlight of the report was a big gains in wages, which rose 2.9 percent compared to 2015, the largest 12-month increase in seven years.
Average hourly earnings rose to $26.00, an unusually-large hike of 10 cents from November. "Since 2010, the United States has put more people back to work than all other G7 economies combined," Obama's chief economic adviser Jason Furman said in an analysis.
At the same time, "real wages have grown faster over the current business cycle than in any since the early 1970s," he added. But rising wages could complicate matters for Trump's economic plans, since economists agree there is not much room for the economy to add more jobs.
- Inflation pressures? - ======================== "We expect unemployment will keep falling and wage gains will continue to accelerate in the year ahead, putting pressure on the Fed to keep tightening," said Jim O'Sullivan, chief US economist for High Frequency Economics.
Nariman Behravesh, chief economist at IHS Markit, agreed the Fed will be watching inflation pressure from wages, which they indicated in the minutes of the December policy meeting could require faster increases in the benchmark interest rate.
"The jobs gains of the last two years cannot be sustained without seriously straining the job market," he said in a research note. "For the first time in many years, the Federal Reserve is beginning to worry about an overheating labor market," and the latest report "will likely add to those worries." - Manufacturing adds jobs - =========================== Manufacturing firms added 17,000 new positions, halting a four-month decline.
Manufacturing has lost 63,000 positions since January, however, in a sector that has been a Primary focus of Trump's. The strongest job gains were in healthcare, which added 33,000 positions for the month, and bars and restaurants, which added 30,000.
The data showed little change in the share of long-term unemployed, or those without work for 27 weeks or more, which stood at 1.8 million people. The rate of participation in the labor force was also little changed at 62.7 percent.
In a separate report, Commerce Department data showed the US trade deficit edged up in November as a strong Dollar helped the US import more goods and made exports more expensive. The trade gap for the month grew $2.9 billion to $45.2 billion, surpassing an analyst consensus that called for a decrease of $200 million.
Mizuho Chief US Economist Steven Ricchiuto said the wage gains are worrisome: "The two data releases this morning fits our view that the Fed will lean toward three rather than two rate hikes in 2017."