U.S. adds 148,000 jobs in December
WASHINGTON—Hiring by U.S. employers slowed a bit as 2017 ended and pay growth was sluggish. Yet that’s actually how investors, at least, like it.
The modest but steady pace of hiring is a reassuring sign for investors who have been buoyed by the just-passed Republican tax plan and have been sending stock market indexes roaring to uncharted heights.
U.S. employers added 148,000 jobs in December, the Labor Department reported Friday. Though down from November’s 252,000, last month’s job gain was still enough to suggest that the economy entered the new year with solid momentum. The unemployment rate remained 4.1 percent for a third straight month, the lowest level since 2000.
The unspectacular pace of job growth and wage increases is welcome news for financial markets because if the numbers were much higher, investors would grow concerned that the Federal Reserve might accelerate its interest rate hikes to ward off potential increases in inflation. Higher rates, in turn, could slow the economy and send stocks down.
Taken as a whole, Friday’s report pointed to the job market’s strength and resilience 8½ years into an economic expansion. Hiring remains steady and is underpinning an economy that’s both contributing to and benefiting from an improved global outlook. The tax cuts are raising hopes for faster growth and higher corporate profits and fueling powerful gains in financial markets.
“I think it’s going to be an awfully good year,” said Carl Tannenbaum, chief economist at Northern Trust. “Absent something unforeseen, this could be one of the best years of the expansion.”
Investors again sent stock prices higher Friday, 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,” Tannenbaum said.
The slowing pace of job growth isn’t surprising: It typically happens when unemployment falls to ultra-low levels and fewer people are available for hiring. Average monthly job growth has declined to 171,000 this year from a peak of 250,000 in 2014. Last year’s gains were the fewest since 2010.