U.S. employers finished 2017 with modest but steady hiring growth
U.S. employers added 148,000 jobs in December, a modest gain but still enough to suggest that the economy entered the new year with solid momentum.
The unemployment rate remained 4.1 per cent for a third straight month, the lowest level since 2000. For all of 2017, employers added nearly 2.1 million jobs, enough to lower the unemployment rate from 4.7 per cent a year ago.
Taken as a whole, Friday’s government report points to the job market’s strength and resilience 8½ years into an economic expansion. Job growth remains steady and is underpinning an economy that’s both contributing to and benefiting from an improved global outlook. The just-enacted U.S. tax cuts, too, are raising hopes for faster growth and higher corporate profits and fuelling a powerful stock market rally.
At the same time, the pace of job growth is slowing, which typically happens when unemployment falls to ultra-low levels and fewer people are available to be hired. Average monthly job gains have declined to 171,000 this year from a peak of 250,000 in 2014. Last year’s job gains were the fewest since 2010.
Despite the low unemployment and the difficulty some employers face in finding enough qualified workers, pay gains remain sluggish. Average hourly earnings rose 2.5 per cent in December from a year earlier — about a full percentage point lower than is typical in a healthy economy. The December job growth, while modest, underscores the economy’s continued health. Last month’s pace of hiring is enough, over time, to lower the unemployment rate.
The steady but unspectacular pace of hiring and modest wage gains make it unlikely that the Federal Reserve will feel compelled to accelerate its pace of rate increases.
Investors seemed pleased and sent stock prices up, one day after the Dow Jones industrial average broke through the 25,000 mark for the first time.
“You’ve got the ‘Goldilocks’ pace for markets: Strong growth and low inflation,” said Carl Tannenbaum, chief economist at Northern Trust.
The unemployment rate for African-Americans reached a record low of 6.8 per cent in December. And the jobless rate for veterans of Afghanistan and Iraq fell to 3.3 per cent, also a record low.
The African-American rate is still much higher than the rate for whites, which was 3.7 per cent, or Asian-Americans, at 2.5 per cent. Blacks have long had a higher unemployment rate than whites. But the gap is now at its lowest level since 1972, when the government began tracking the data, according to Michael Feroli, an economist at JPMorgan Chase.
Solid economic growth in both the United States and major countries overseas is supporting more hiring.
Factory managers received the most new orders in December than in any month since 2004. Retailers have reported strong holiday sales.
Builders are ramping up home construction to meet growing demand.
Sales of existing homes reached their fastest pace in nearly 11 years in November.