New job creation far exceeds expert forecasts

Number of positions created in December far exceeds experts’ forecast

In a sea of global gloom to start the new year, the U. S. job market remains a ray of sunshine.

Dark clouds may be sitting over China, the Middle East and Wall Street, but there is a glimmer of hope — thanks to a blowout December jobs report.

It looks like the USA has a good shot at fending off all the negative global economic news and avoid the one thing Wall Street fears most: a recession.

Indeed, the American job machine was very much alive and well at the end of 2015.

Proof arrived Friday when the federal government reported that 292,000 jobs were created last month — way above the 200,000 jobs forecast by economists. To add to the upbeat message, the government revised up its job count in No-

vember by 41,000 and October by 9,000. That’s an additional 50,000 new jobs.

For a third straight month, the nation’s unemployment rate stayed steady at 5%.

“The ( strong jobs report) should put to ( rest) any fears that the U. S. recovery is in serious difficulty, even if fourth- quarter GDP growth ends up being fairly lackluster,” Paul Ashworth, chief U. S. economist at Capital Economics, told clients in a note.

The report is exactly the kind of news Wall Street needs as the bruised stockmarket, which is off to its worst first five days to a new year, looks for reasons to stabilize.

It, and the rebound in Chinese stocks overnight, helped for a while Fridaymorning before selling returned to slam U. S. stocks again.

“The job report suggests the U. S. labor market continues to be quite healthy,” UBS economist Drew Matus says. “That should bode well for consumption and housing. While wages disappointed, other areas of the report— notably manufacturing jobs— suggested that recent gloom regarding the outlook may be overstated.”

The message the strong reading on the jobs market sends is that the U. S. economy remains strong and is weathering the global storm— at least for now.

More important, it shows that the array of problems overseas — especially those centered in China, the world’s second- biggest economy — has yet to spill over into the U. S. economy in amajor way.

What the strong jobs number doesn’t do is make all of China’s problems go away.

“With storm clouds remaining over much of the global economy, the U. S. economy isn’t all sunshine, but there are some positive stories to tell with the unemployment rate at 5%,” Bankrate. com senior economic analyst Mark Hamrick says. “Now with the surprisingly firm December report behind, we know that 2015 was a year of solid job growth with about 2.7million jobs added.”

A super strong job market does pose a risk: It could keep the Federal Reserve on track to hike short- term rates four times this year, which is more than Wall Street is betting on.

“The economy is stronger than you think. The risks from China are overblown. Four rate hikes are coming this year, bet on it,” says Chris Rupkey, chief financial economist at Mitsubishi UFJ Financial Group Union Bank.

The key question is whether there will be more good news after the jobs report.

The answer might come next week when the earnings reports for the fourth quarter of 2015 start rolling in.

If the profit numbers remain strong — and CEOs provide a constructive outlook for 2016 and downplay risks — stocks might finally find their footing.