December employment gain caps best year for US since 1999; wage gains lag
A rise in employment and a falling jobless rate in December capped the best year for the labor market since 1999 and reinforced the U.S. role as the global economy's standout performer.
The 252,000 jobs added followed a 353,000 rise the prior month that was more than previously estimated, a Labor Department report showed today in Washington. The jobless rate dropped to 5.6 percent, the lowest level since June 2008. The report wasn't all good news as earnings unexpectedly declined from a month earlier.
"We have continued, solid job growth," said Michael Feroli, chief U.S. economist at JPMorgan Chase & Co. in New York, who projected a 240,000 gain. "It shows really solid momentum in U.S. growth. There are not a lot of places in the world where we see that these days."
About 3 million more Americans found work in 2014, the most in 15 years and a sign companies are optimistic U.S. demand will persist even as overseas markets struggle. The drop in workers' hourly wages means Federal Reserve policy makers are less likely to move up the timing of an interest-rate increase.
"The data certainly don't point to any wage pressures," said Stephen Stanley, chief economist at Amherst Pierpont Securities LLC in Stamford, Connecticut. "There's nothing to worry about with respect to inflation. It lowers the odds of the Fed having to move faster than they'd like."
Stocks fell, after a two-day rally in the Standard & Poor's 500 Index, on the drop in wages and concern grew that Europe's stimulus plan might not be sufficient. The S&P 500 declined 0.8 percent to 2,044.81 at the close in New York. The yield on the benchmark 10-year note retreated to 1.95 percent from 2.02 percent late yesterday.
Job growth last month was highlighted by the biggest gain in construction employment in almost a year. Factories, health care providers and business services also kept adding workers in December.
The median forecast in a Bloomberg survey of 99 economists called for a 240,000 advance in payrolls. Estimates ranged from 160,000 to 305,000 after a previously reported 321,000 November increase. Revisions to prior reports added a total of 50,000 jobs to the previous two months.
The unemployment rate, which is derived from a separate Labor Department survey of households, was projected to drop to 5.7 percent from 5.8 percent, according to the survey median. The jobless rate averaged 6.2 percent last year, down from 7.4 percent in 2013 and the biggest decrease since 1984.
"The jobs report demonstrates that we have a very strong wind in our back in the U. S. economy," Labor Department Secretary Tom Perez said in a telephone interview. Part of the government's unfinished agenda is to "make sure the rising tide lifts all boats."
More people dropped out of the labor force in December. The participation rate, which indicates the share of working-age people in the labor force, decreased to 62.7 percent, matching the lowest level since February 1978, from 62.9 percent.
The combination of job growth and cheaper gasoline will probably help stretch workers' paychecks and sustain consumer spending. Prices at the gas pump are the lowest since 2009, according to AAA, the largest U.S. motoring organization.
Average hourly earnings for all employees dropped from the prior month by 0.2 percent, the biggest since comparable records began in 2006. Earnings rose 0.2 percent in November, half as much as previously reported. They increased 1.7 percent over the 12 months ended in December, the least since October 2012.