MW: U.S. adds 252,000 jobs in December as wages slip
WASHINGTON (MarketWatch) — The U.S. added 252,000 new jobs in December to extend the strongest streak of hiring since the mid-1990s, but wages fell and more people dropped out of the labor force to tarnish an otherwise excellent employment report.
The nation’s unemployment rate also continued to tumble, falling to 5.6% from 5.8% and hitting the lowest level since June 2008, the Labor Department said Friday. The fall in the jobless rate stemmed from an increase in the number of people working and more Americans dropping out of the labor force.
Yet the surge in new job creation and sinking unemployment still haven’t led to sustained increases in how much American workers get paid each hour, the key to putting the U.S. recovery on an ideal growth path.
Wages fell 5 cents, or 0.2%, to $24.57 an hour. And the gain over the past 12 months slowed to just 1.7%.
Wage gains have averaged 2% or slightly less since 2010, just two-third as fast as they normally grow. Economists predict a tightening labor market will spur higher wages but so far earnings haven’t budged much. The Federal Reserve in December cited a lack of clear evidence of rising wages as reason it may keep interest rates near zero for an extended period.
U.S. stock futures SPY, +0.09% pared some losses after the report, while the yield on the 10-year Treasury 10_YEAR, +0.00% rose.
Inside the report
As has been the pattern lately, most industries took on workers. Job gains were strongest in the profession ranks, construction, health care, restaurants and manufacturing.
Notably, the construction trade added 48,000 worker during an unseasonably warm December and manufacturers beefed up their workforces by 17,000.
The economy has added at least 200,000 jobs for 11 straight months, the longest streak in almost 20 years. In 2014, the U.S. created 2.95 million new jobs to mark the largest gain since a 3.18 million increase in 1999.
Although wages aren’t rising especially fast, most Americans are taking home more money because they are working longer hours compared to a few years ago. The average length of the workweek was unchanged at 34.6 hours in December to remain at postrecession high
Still, if the pace of hiring keeps up, wages are bound to accelerate. Even small businesses, long the laggards in the more than five-year-old recovery, are getting into the act. A new survey by the top trade group for small businesses says its members expect a very good year in 2015, and plans to hire are the strongest since the recession ended.
What might act as a major obstacle to new jobs, however, is a dearth of qualified applicants. Even though some 18 million Americans who want a full-time job say they can’t find one, many companies big and small alike complain that they cannot find suitable workers.
Another potential drag is the slow growth around the world.
U.S. companies are watching to see if exports take a big hit and any new-found caution on their part could partly offset some of the economic benefit of plunging gasoline prices. Consumers are reaping a tidy windfall from lower gasoline costs and that could spur them to spend more on other goods and services.
Employment gains for November and October, meanwhile, were revised up by a combined 50,000. The government said 353,000 new jobs were created in November, up from a preliminary 321,000. October’s gain was raised to 261,000 from 243,000.
Yet the labor-force participation rate dropped 0.2 percentage points in December to 62.7%, matching a postrecession low and a level last seen in 1978.
