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U.S. Job Growth Exceeds Expectations

by Peter Thomas Ricci

The 2015 job market finished out the year on a high note

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The economy added 292,000 jobs in December, while the unemployment rate held steady at 5.0 percent, according to the latest report from the Bureau of Labor Statistics.

Those job growth numbers were far stronger than the 200,000 new jobs that analysts had predicted. The BLS  emphasized that employment growth was particularly strong in professional and business services, construction, health care, and food services and drinking places, while mining employment continued to fall.

Doug Duncan, the chief economist for Fannie Mae, said that such job growth numbers confirm future interest rate increases from the Federal Reserve.

“This will likely firm the market’s expectation that the Fed will proceed with their gradual increase in the Fed Funds target – most likely with the next step in March,” Duncan said.

The December Job Market

Job growth differed across different sectors in the economy:

  • Employment in professional and business services increased by 73,000 in December, with temporary help services accounting for 34,000 of the gain. For all of 2015, professional and business services added 605,000 jobs, compared with a gain of 704,000 in 2014.
  • Construction also had a strong showing, with strong job growth for the third consecutive month and 45,000 jobs gained in December. Job gains occurred among specialty trade contractors (+29,000) and in construction of buildings (+10,000). Over the year, construction added 263,000 jobs, compared with a gain of 338,000 jobs in 2014.
  • Health care employment rose by 39,000, with most of the increase occurring in ambulatory health care services (+23,000) and hospitals (+12,000). Job growth in health care averaged 40,000 per month in 2015, compared with 26,000 per month in 2014.
  • Employment in mining, which includes oil and gas exploration, continued to decline in December (-8,000). After adding 41,000 jobs in 2014, mining lost 129,000 jobs in 2015.

For 2015, payroll employment growth totaled 2.7 million, compared with 3.1 million in 2014.

Lingering Problems with the Economy

As positive as December’s jobs report was, there are lingering problems that remain with the U.S. economy, especially the fringes of the labor markets.

For instance, the number of long-term unemployed, meaning those who have been out of work for more than a year, remained high at 2.1 million, or 26.3 percent of the unemployed; that number has changed little since June. Similarly concerning were the BLS’ findings on involuntary part-time workers (those who want full-time work, but can only find part-time jobs) and discouraged workers (those who have given up looking for work). As of December, there remain 6.0 million involuntary part-time workers and 663,000 discouraged workers, the latter stat being unchanged from a year ago.

Most troubling of all is the state of wages, which the BLS found continue to grow, but slowly. Average hourly earnings declined 1 cent from November to December, and are only up 2.5 percent from a year ago. As we’ve reported before, earnings for most American workers are at the same level as they were in the early ’70s, and if wages continue to grow slowly, it could have wide impacts on other parts of the economy – including housing.

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