WASHINGTON - The U.S. economy added 156,000 new jobs in December, according to government data issued Friday, slightly below economists’ expectations. Yet wages showed strong growth in the final full month of President Barack Obama’s administration, evidence that economic growth is finally translating into gains for workers as President-elect Donald Trump prepares to take office.
Data issued by the Labor Department showed the unemployment rate at 4.7 percent, slightly up from 4.6 percent the previous month. Revisions to job figures for October and November added another 19,000 jobs to the rolls.
Average hourly earnings increased by 10 cents from the previous month to $26 in December. Over the year, wages are up 2.9 percent, the strongest increase in more than seven years.
“The economy is probably close to full employment. We’re clearly seeing evidence that wage pressures are starting to build,” said Jim O’Sullivan, chief U.S. economist at High Frequency Economics.
Economists surveyed by Bloomberg had expected American companies to add 180,000 jobs in the month. Still, the number of new jobs added in December was far above what’s needed to keep up with population growth, economists said. December marks the 75th straight month of job growth - the most extended streak the country has seen since 1939.
The number of new jobs added each month has gradually slowed as the economy recovers from the depths of the recession, from average monthly gains of 251,000 in 2014 to 229,000 in 2015 and 165,000 in the last three months of 2016.
“We’d expect the rate of job growth to slow as the recovery matures and we get back to where unemployment is likely to remain longer term,” said Jed Kolko, chief economist at job search site Indeed.
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The Dow Jones Industrial Average and the Standard & Poor’s 500 stock index opened lower after the release of the report Friday. The dollar strengthened, and the yield on U.S. Treasuries rose on signs that stronger growth would bolster the case for higher interest rates.
The strongest growth came in the health-care sector, which added 43,000 jobs in December, as new hospitals opened, the Affordable Care Act increased the ranks of the insured, and America’s aging population demanded more services, said Diane Swonk, a Chicago-based economist.
“As Congress seeks to repeal Obamacare, the question is whether they have something to replace it with. Uncertainty regarding the coverage of individuals going forward could dampen the rise of health-care employment that we’ve seen in recent years,” Swonk said.
The leisure and hospitality sector saw some of the strongest wage gains in December, Swonk said, as recently passed minimum wage laws pushed up earnings at the low end of the scale. Higher wages have not shrunk employment in the sector, due partly to a robust holiday shopping season, she said.
Trump inherits an economy that is relatively healthy, though economists caution that some workers, especially those with less education and fewer skills, and some regions of the country -- including the Midwest and South -- continue to lag behind in the recovery. Trump has pledged to boost the U.S. economy by reducing regulations and corporate taxes, boosting infrastructure spending, and reviving America’s manufacturing sector.
Signs of a strengthening economy persuaded the U.S. Federal Reserve to vote unanimously in December to raise their benchmark interest rate by a quarter of a percentage point, the first such increase in a year.
In its December meeting, Fed officials did not mention Trump by name, but they clearly discussed the potential economic impact of his impending presidency. Minutes of the meeting released in early January cited Fed officials as saying that they may need to lift rates faster in the future if changes in government spending cause inflation to rise by more than expected, likely referring to Trump’s promise to boost infrastructure spending.
“We’re operating under a cloud of uncertainty at the moment, and we have to wait and see what changes occur and factor those into our decision-making as we gain more clarity,” Fed Chair Janet Yellen said in a news conference.