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January 08, 2016 at 06:22 AM
(Bloomberg) — America’s labor-market juggernaut continued to roll unabated at the end of 2015.
Employers in December added 292,000 workers, exceeding the highest estimate in a Bloomberg survey, and payrolls for the previous two months were revised higher, a Labor Department report showed on Friday. The jobless rate held at 5 percent as people entering the labor force found work. At the same time, worker pay disappointed, rising less than forecast from a year earlier.
Stocks and the dollar climbed after the report showed durable strength in the job market that indicates employers were optimistic about the economy’s prospects just before the recent rout in global financial markets. Federal Reserve policy makers, who raised interest rates in December for the first time in almost a decade and signaled further moves would be gradual, are counting on tighter labor conditions to lead to a pickup in wages and inflation.
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“This should calm some fears about the U.S. economy losing growth momentum,” said Michael Feroli, chief U.S. economist at JPMorgan Chase & Co. in New York and a former Fed economist. It “also validates the sense that there’s no rush to tighten again because we’re not seeing much wage pressure.”
Survey results
The December advance exceeded the highest forecast in a Bloomberg survey and followed a 252,000 increase in November that was stronger than the previously estimated 211,000. The median forecast in a Bloomberg survey called for 200,000. The readings capped the second-best year for hiring since 1999.
The December job gains, which were probably helped by mild winter weather across much of the country, were led by temporary help services, health care, transportation and construction.
Labor Department revisions to prior reports added a total of 50,000 jobs to payrolls in November and October. For all of 2015, employment climbed by 2.65 million after a 3.1 million gain in 2014, for the best back-to-back years since 1998-99.
Economists’ forecasts
December payroll estimates of 92 economists in the Bloomberg survey ranged from gains of 135,000 to 250,000. The unemployment rate, which is derived from a separate survey of households, matched the median forecast.
The unemployment rate for all of 2015 averaged 5.3 percent, the best since 2007, when it was 4.6 percent.
While employers continue to aggressively add to headcounts, worker pay has yet to show a sustainable pickup. Average hourly earnings in December were unchanged from the prior month and increased 2.5 percent from a year earlier. The median forecast called for a 2.7 percent year-over-year gain.
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The year-to-year advance, which was the biggest since October, was primarily due to an easy comparison with December 2014, when earnings fell 0.2 percent from the previous month. This so-called base effect will probably result in some payback with the January employment report when earnings come up against a strong January 2015 comparison.
