Jobs Report: U.S. Adds 252,000 Jobs; Unemployment Falls to 5.6%
Wages Remain Stagnant Despite Best Year of Hiring Since 1999
http://www.wsj.com/articles/u-s-adds-252-000-jobs-unemployment-falls-to-5-6-1420810489
WASHINGTON—The U.S. posted its strongest year of job growth in 15 years and the unemployment rate fell to a postrecession low last month, evidence of momentum for the labor market marred by softer wages and a rise in workforce dropouts.
Nonfarm payrolls rose a seasonally adjusted 252,000 in December,the Labor Department said Friday, with broad-based gains across a wide array of sectors.
The unemployment rate, which is obtained from a separate survey of U.S. households, was 5.6% in December, down two-tenths of a percentage point from the prior month and now at its lowest level since June 2008. However, the decrease was driven in part because people stopped looking for a job.
“Today’s job’s report—again—was very strong and shows the labor market is maturing and economy performing soundly,” said Jack Kleinhenz, chief economist at the National Retail Federation. “However, the earnings data was a bit disappointing.”
Stagnant wages have limited household budgets and been a check on consumer spending. Average hourly earnings for private-sector workers fell 5 cents to $24.57 in December. The average workweek held steady at 34.6 hours in December.
Over the past year, hourly earnings are up a mere 1.7%, barely ahead of inflation’s 1.3% rate.
“The simple fact is we cannot consider an employment report a success, no matter how healthy the headline may be, if wage data does not begin to accelerate,” Dan Greenhaus, chief strategist at BTIG, said in a note to clients.
Federal Reserve officials have flagged tepid wage gains as a sign of labor-market slack. According to minutes of the central bank’s Dec. 16-17 meeting, released Wednesday, “most participants saw no clear evidence of a broad-based acceleration in wages.”
And even with the unemployment rate at 5.6% last month, nearly 8.7 million Americans who wanted a job couldn’t find one.
Overall, though, Friday’s report was broadly positive and capped a solid year for the labor market.
Altogether, employers added 2.95 million jobs in 2014, the biggest calendar-year increase since the figure topped 3 million in 1999. Of course, the U.S. population has grown significantly in that time, to more than 318 million in 2014 from 279 million in 1999, when the unemployment rate ended the year at 4.0%.
Monthly job increases averaged 289,000 per month in the final three months of the year, compared with 246,000 per month for all of 2014 and 194,000 for 2013. Revisions showed employers added 50,000 more jobs in October and November than previously estimated. November’s payroll gain of 353,000 was revised up from an initially reported 321,000. October’s payroll gain of 261,000 was revised up from 243,000.
The recent labor-market gains underscore the relative strength of the U.S. economy, especially compared with Japan, nations in the eurozone and many developing countries. U.S. gross domestic product, the broadest measure of output, expanded at a 5% pace in the third quarter, the strongest advance in 11 years. Economists expect growth was slower in the final three months of 2014, though estimates are still broadly positive. Forecasting firm Macroeconomic Advisers is predicting 3% growth to round out the year.
Friday’s report showed the strongest hiring in professional and business services in December, including fields such as administrative and waste services and computer system design. Construction, food services, health care, manufacturing and wholesale trade also posted gains.
If the economy continues to create jobs at a strong pace, wages could start to rise faster and more people could come off the sidelines. Labor-force participation rates are stuck near levels last seen in the late 1970s. The participation rate was 62.7% in December, down two-tenths of a percentage point from November and matching a 36-year low. Once people leave the workforce, they are no longer counted as unemployed.
http://www.wsj.com/articles/u-s-adds-252-000-jobs-unemployment-falls-to-5-6-1420810489
A broader version of the unemployment rate, which includes involuntary part-time workers and people marginally attached to the labor force, was 11.2% last month, down from 11.4% in November.
The Fed has kept short-term interest rates set near zero for six years to help support the U.S. economy through the recession and a lackluster recovery. Officials have suggested that they may begin to raise rates this year, though minutes of December’s meeting also signaled concern about weak growth overseas.
“Overall, there has been a clear acceleration in job growth since last summer, a faster decline in the unemployment rate, but few signs of faster wage growth,” said Paul Dales, senior U.S. economist at Capital Economics. “If the activity data continue to improve, as we expect, then the Fed may not wait for wage growth to rise and could still raise rates as soon as March.”
Wages Remain Stagnant Despite Best Year of Hiring Since 1999
http://www.wsj.com/articles/u-s-adds-252-000-jobs-unemployment-falls-to-5-6-1420810489
WASHINGTON—The U.S. posted its strongest year of job growth in 15 years and the unemployment rate fell to a postrecession low last month, evidence of momentum for the labor market marred by softer wages and a rise in workforce dropouts.
Nonfarm payrolls rose a seasonally adjusted 252,000 in December,the Labor Department said Friday, with broad-based gains across a wide array of sectors.
The unemployment rate, which is obtained from a separate survey of U.S. households, was 5.6% in December, down two-tenths of a percentage point from the prior month and now at its lowest level since June 2008. However, the decrease was driven in part because people stopped looking for a job.
“Today’s job’s report—again—was very strong and shows the labor market is maturing and economy performing soundly,” said Jack Kleinhenz, chief economist at the National Retail Federation. “However, the earnings data was a bit disappointing.”
Stagnant wages have limited household budgets and been a check on consumer spending. Average hourly earnings for private-sector workers fell 5 cents to $24.57 in December. The average workweek held steady at 34.6 hours in December.
Over the past year, hourly earnings are up a mere 1.7%, barely ahead of inflation’s 1.3% rate.
“The simple fact is we cannot consider an employment report a success, no matter how healthy the headline may be, if wage data does not begin to accelerate,” Dan Greenhaus, chief strategist at BTIG, said in a note to clients.
Federal Reserve officials have flagged tepid wage gains as a sign of labor-market slack. According to minutes of the central bank’s Dec. 16-17 meeting, released Wednesday, “most participants saw no clear evidence of a broad-based acceleration in wages.”
And even with the unemployment rate at 5.6% last month, nearly 8.7 million Americans who wanted a job couldn’t find one.
Overall, though, Friday’s report was broadly positive and capped a solid year for the labor market.
Altogether, employers added 2.95 million jobs in 2014, the biggest calendar-year increase since the figure topped 3 million in 1999. Of course, the U.S. population has grown significantly in that time, to more than 318 million in 2014 from 279 million in 1999, when the unemployment rate ended the year at 4.0%.
Monthly job increases averaged 289,000 per month in the final three months of the year, compared with 246,000 per month for all of 2014 and 194,000 for 2013. Revisions showed employers added 50,000 more jobs in October and November than previously estimated. November’s payroll gain of 353,000 was revised up from an initially reported 321,000. October’s payroll gain of 261,000 was revised up from 243,000.
The recent labor-market gains underscore the relative strength of the U.S. economy, especially compared with Japan, nations in the eurozone and many developing countries. U.S. gross domestic product, the broadest measure of output, expanded at a 5% pace in the third quarter, the strongest advance in 11 years. Economists expect growth was slower in the final three months of 2014, though estimates are still broadly positive. Forecasting firm Macroeconomic Advisers is predicting 3% growth to round out the year.
Friday’s report showed the strongest hiring in professional and business services in December, including fields such as administrative and waste services and computer system design. Construction, food services, health care, manufacturing and wholesale trade also posted gains.
If the economy continues to create jobs at a strong pace, wages could start to rise faster and more people could come off the sidelines. Labor-force participation rates are stuck near levels last seen in the late 1970s. The participation rate was 62.7% in December, down two-tenths of a percentage point from November and matching a 36-year low. Once people leave the workforce, they are no longer counted as unemployed.
http://www.wsj.com/articles/u-s-adds-252-000-jobs-unemployment-falls-to-5-6-1420810489
A broader version of the unemployment rate, which includes involuntary part-time workers and people marginally attached to the labor force, was 11.2% last month, down from 11.4% in November.
The Fed has kept short-term interest rates set near zero for six years to help support the U.S. economy through the recession and a lackluster recovery. Officials have suggested that they may begin to raise rates this year, though minutes of December’s meeting also signaled concern about weak growth overseas.
“Overall, there has been a clear acceleration in job growth since last summer, a faster decline in the unemployment rate, but few signs of faster wage growth,” said Paul Dales, senior U.S. economist at Capital Economics. “If the activity data continue to improve, as we expect, then the Fed may not wait for wage growth to rise and could still raise rates as soon as March.”
