Economy adds 148K jobs in December

The U.S. economy added a modest 148,000 jobs in December, below expectations, but the figure caps off the seventh consecutive year of annual employment growth above 2 million, the longest streak since the web boom of the 1990s.

The unemployment rate held at 4.1 percent for the third straight month, the lowest level since December 2000, when it was 3.9 percent, as the economy maintained steady growth through a series of major hurricanes late in the summer, the Labor Department reported on Friday.

The jobless rate dropped from 4.8 percent in January a year ago.

{mosads}Mark Hamrick, Bankrate.com’s senior economic analyst, said that while the December payrolls number was “slightly disappointing,” hiring is strong enough to “remove slack from the labor market.”

“As the benefits of the tax cut begin to hit in February, individuals and corporations will have decisions to make whether to spend or invest, both good options for the economy,” Hamrick said.

“Some of that should affect employment in a positive way,” he said. 

Average monthly job gains slowed to 171,000 last year as the labor force tightened. 

There were 9,000 fewer jobs created in October and November than previously reported, and job gains averaged 204,000 over the past three months.

Overall, employment rose 2.05 million in 2017, a pace that was slower than 2016, during President Obama’s final year in office, and the slowest since the labor market’s recovery began in 2010.

But in 2018, jobs and economic growth are expected to ride the rising tide behind a sweeping Republican tax package.

House Ways and Means Committee Chairman Kevin Brady (R-Texas), who helped shepherd the tax legislation through Congress, said that “with a new tax code that’s built for growth, 2018 stands to be an even better year for creating good-paying jobs, increasing paychecks and helping our businesses compete and win here at home and around the world.”

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President Trump has taken credit for the economy he inherited from Obama, touting the stock market’s record levels — the Dow Jones hit 25,000 on Thursday — along with strong consumer confidence and the steady jobs growth since he was elected in November 2016.

With expectations that the unemployment rate will continue to drop, Hamrick said that “it remains to be seen whether more Americans will come back into the workforce seeing the positive job market story.”

The economy is expected to keep adding jobs this year and the unemployment rate is on track to fall to unprecedented levels, around 3.5 percent. Meanwhile, economic growth is forecast to feed off the effects of the new tax law and increase to about 2.9 percent for the year.

Stuart Hoffman, PNC senior economic adviser, said his group is forecasting another small slowdown to about 140,000 jobs a month in 2018, “more due to a lack of qualified workers rather than softer demand for qualified employees.” 

“However, migration from Puerto Rico to the mainland in the aftermath of Maria could help alleviate hiring shortages and support job growth,” Hoffman said. 

The economy hasn’t lost jobs in any month since October 2010, although there was a close call in September when the initial report showed the first loss of jobs in seven years. That report was eventually revised up into positive territory, keeping the streak alive. 

Employers have added jobs for 87 straight months.

Wages, which economists are expecting to rise faster as employers have a harder time finding workers, rose 9 cents in December and 65 cents for the year, a gain of 2.5 percent.

Nationwide’s chief economist, David Berson, said that while wage growth continues to rise “only modestly despite unemployment rates below what most analysts would consider to be full employment, it suffers from demographic mix problems that are tending to suppress gains.”

Those issues include a growing number of higher-wage baby boomers leaving the workforce and being replaced by lower-wage millennials.

Friday’s report showed that employment in health care increased by 31,000 in December and health care added 300,000 jobs for the year, down from 379,000 jobs in 2016.

Construction added 30,000 jobs in December while manufacturing employment rose by 25,000, for a total of 196,000 jobs for the year. 

The number of long-term unemployed accounted for 22.9 percent of the unemployed and fell 354,000 over the year.

Retailers shed more than 20,000 jobs in December. 

This report was updated at 10:00 a.m.