Private payrolls rose by a net 212,000 in December as the overall jobless rate fell to 8.5%, the lowest in nearly three years, the Labor Department reports. Still, the pace of job creation last month is a bit of a letdown after yesterday’s stellar rise via ADP’s estimate. But let’s not quibble too much. Today’s report is still quite respectable in the current climate. Indeed, a gain of 212,000 jobs is a decent showing after November’s tepid 120,000 gain. If nothing else, today’s number du jour puts more pressure on the folks who argue there’s a recession in the offing.
Never say never, but economic contractions don’t have a history of arriving when the labor market is expanding at the current pace. And if job creation is strengthening, as it seems to be, pessimism about the macro trend may out of style for a stretch. Sure, there may be a recession off in the distance and next month may bring dismal news. But there’s no sign of darkness in today’s employment report. Job growth is hardly the only data point to consider when reviewing macro trends, but it’s certainly a fair slice of the total package. And when you consider some of the other encouraging reports of late, it’s tempting to see the proverbial glass as half full.
Another cause for optimism is the fact that the December rise in private payrolls is the strongest showing for the final month on the calendar since 1999. In addition, quite a bit of the stronger job growth in December is due to a pop in employment from cyclically sensitive areas of the economy, namely, the goods-producing industries, including manufacturing and construction. Yet the crucial services sector, which accounts for the lion’s share of private employment, also rebounded smartly with employment growth in December.
It’s fair to say that the labor market is firing on all cylinders at a moderately faster pace than we’ve seen for several months. That’s hardly a cure for all the macro ailments that plague us, but it’s a sign that maybe, just maybe, the labor market is healing.
Today’s jobs report “highlights that the U.S. economy is on its way to recovery even as strains in Europe persist,” David Watt, senior currency strategist at RBC Capital, tells Reuters.
There was also encouraging news for wages too. Average hourly earnings for private-sector employees gained 0.2%, which translates into a rise of 2.1% over the past year. Average hours worked also rose a bit last month. “You got the trifecta — more people working, wages up and the average work week up,” says Stuart Hoffman, chief economist at PNC Financial Services Group. “You can’t really argue that that isn’t a sign of significant improvement in the job market.”