- Category: Economic
- Published Friday, January 8, 2016
- CTV News
WASHINGTON -- American employers added a robust 292,000 jobs in December, suggesting that the U.S. economy is so far defying global weakness and growing solidly.
The strong figures underscore the resilience of the United States at a time of financial turmoil stemming from China's slowing economy and plummeting stock market. Most economists expect U.S. consumer spending to continue to offset overseas weakness, though many foresee only modest U.S. growth.
In its monthly jobs report Friday, the Labor Department said the unemployment rate remained 5 per cent in December for a third straight month. More Americans started looking for jobs and succeeded in finding them.
The government also said employers added a combined 50,000 more jobs in October and November than it had previously estimated. For the July-September quarter, hiring averaged 284,000 a month -- the best three-month pace in a year.
Even as many more jobs have been added, the unemployment rate has held at 5 per cent over the past three months because nearly a million more Americans have begun looking for jobs since September.
U.S. stocks rose modestly after the jobs report was issued, with the Dow Jones industrial average up about 48 points after falling sharply all week.
"The economy is reflected most strongly in the jobs numbers -- and it's doing OK, maybe better than OK," said David Berson, chief economist at Nationwide Insurance.
For all of 2015, employers added 2.65 million jobs, a monthly average of 221,000. That made 2015 the second-best year for hiring since 1999, after 2014's gain of 3.2 million jobs.
"2015 went out with a megabang," says Patrick O'Keefe, director of economic research at the accounting and consulting firm CohnReznick. "It speaks to the underlying strength of the domestic economy. The United State is intertwined with the international economy but to a far lesser degree than many other countries."
O'Keefe noted that global trade accounts for only about 30 per cent of U.S. economic activity, one of the lowest such percentages in the world.
Beth Ann Bovino, U.S. chief economist at Standard & Poor's Ratings Services, said the actions the U.S. government took amid the financial meltdown in 2008 are still paying off and should continue to shield the slow and steady recovery this year from the global weakness.
The groundwork for that stability stems in part from the record-low interest rates engineered by the Federal Reserve, as well as policies such as the "cash for clunkers" program, the payroll-tax holiday and the business investment tax credit that helped energize the economy years ago.
"Because the U.S. government and the Fed early on gave support for this recovery, we've been able to withstand any bumps along the road," Bovino said.
Even as demand for workers grew, average hourly pay slipped a penny in December to $25.24 an hour. Still, average pay has risen 2.5 per cent in the past year, only the second time since the Great Recession ended in mid-2009 that it has reached that level. At the same time, pay growth remains below the roughly 3.5 per cent pace typical of a healthy economy.
Last month, the percentage of adults with jobs rose for a second straight month, though it remains below pre-recession levels. And many of the new jobs were in higher-paying industries: Construction added 45,000, health care nearly 53,000. Professional and business services, which includes accountants, engineers, and architects as well as lower-paid temporary workers, added 73,000 positions.
The solid jobs report could raise the likelihood that the Fed will further raise rates after announcing its first increase in nearly a decade last month. Steady hiring would reduce the supply of people seeking jobs, which could lead to higher wages and possibly lift inflation closer to the Fed's 2 per cent target.Many economists expect the Fed to raise its benchmark rate three times this year.
Still, Friday's report contained no signs of inflation. Average hourly earnings fell by a penny between November and December to $25.24.
For months, U.S. employers have hired steadily even as global growth has flagged and financial markets have sunk. Stronger customer demand has given most businesses confidence to hire even though some sectors -- notably manufacturing and oil and gas drilling -- are struggling.
Still, stumbling growth in countries like China, the world's second-largest economy, and financial market turmoil might pose long-term challenges for the U.S. economy.
The dollar has climbed about 10 per cent in value in the past year compared with overseas currencies. That has made U.S. goods more expensive globally while lowering the price of imported products.
U.S. manufacturers added 30,000 jobs last year, a marked decline from 2014. Yet it makes up just 10 per cent of the U.S. economy and oil and gas drilling even less.
For now, Americans are confident enough to buy homes. Sales of newly built homes jumped nearly 15 per cent in 2015 and helped spur building and construction hiring: Construction companies added 215,000 jobs last year, a 3.4 per cent gain.
In another sign of consumer health, auto sales rose to a record high last year as cheap gas and low interest rates led to booming sales of SUVs and pickup trucks.
AP Economics Writers Josh Boak and Paul Wiseman contributed to this report.