The US economy firmly fended off global economic weakness and turmoil in China as employers added 292,000 new jobs last month, far better than expected.
The Labor Department’s December employment report confirmed an economy resilient despite the slowdown in China and other emerging economies, continued weakness in Europe and the steep job losses in the oil sector.
On top of the surprising strength in December — just 200,000 jobs were expected — the numbers for the previous two months were revised higher by a total 50,000 positions, underscoring an acceleration of hiring across the economy in the final quarter of the year.
While the official unemployment rate continued to hold at 5.0 percent, and wage gains remained tepid at 2.5 percent year on year, the report supported the Federal Reserve’s view that the employment sector was tightening fast enough to justify it raising its benchmark interest rate last month for the first time in over nine years.
The jobs report also demonstrated that expectations of small hikes in the central bank’s federal funds rate were not causing employers to hold off recruiting new workers when they need them.
“It’s extraordinary to see such rapid jobs growth, and increasingly low unemployment, with no inflationary pressures at all,” said Brookings Institution senior economist Justin Wolfers in a tweet.
Hiring was solid across the board, led by construction, professional and business services, and health care.
While the mining sector continued to shed jobs, primarily due to the collapse in crude-oil prices, even the government was picking up the slack with expanded hiring.
The data suggested an increase of workforce dropouts returning to the labor market, though there were still some signs of weakness.
The number of long-term unemployed — those unable to find a new jobs after searching for 27 weeks or more — was unchanged at 2.1 million.
And the number of people forced to work part time because they cannot find full-time jobs held steady at 6.0 million.
And the participation rate in the labor market remained at a low 62.6 percent, compared with more than 66 percent before the recession.
– Fed rate hike supported –
Even so, the overall picture was similar to that of the members of the Fed’s policy body, the Federal Open Market Committee, when they decided on December 16 that the economy was resilient enough to handle a quarter percentage point increase in the near-zero federal funds rate, which should increase borrowing rates for consumers and businesses.
“Today’s job numbers should be soothing to the FOMC, to markets, and to workers, and stand in sharp contrast to the negative economic news emanating from China,” said Beth Ann Bovino, chief US economist at Standard & Poor’s Ratings Services.
“Markets are desperate for good news, and now have it, but it comes with a caveat because better employment growth means the Fed will raise rates faster…. People are finding jobs and getting paid more for them.”
The news gave a boost to the US dollar, the strength of which has been hurting US exports. At about 1430 GMT the dollar was trading at $1.0874 per euro, compared with $1.0928 late Thursday.
US stock markets, already poised for a rebound from Thursday’s rout before the jobs data came in, opened higher: 10 minutes into trade the S&P 500 added 0.6 percent.