U.S. economy adds 312k jobs in December with wage growth surging
Wage growth rises the most since 2008
The U.S. non-farm payrolls report came out on Friday last week and it covered December.
Data showed that U.S. employers added jobs in December at the fastest pace since February 2018 along with an increase in wage growth. The data suggested that the real economy in the United States maintained a strong momentum close to the end of the year.
On a seasonally adjusted basis, the nonfarm payrolls rose 312,000 during the month. This was the biggest jump since February while the average hourly earnings rose by 0.4% on the month to a seasonally adjusted annual basis of 3.2%. This was the best pace of wage growth since 2008.
Estimates showed that economists forecast employment to rise 177,000 for December. This follows an increase of the original reading at 155,000 in December. Economists also expected the U.S. unemployment rate to hold steady at 3.7% during the month.
The December data showed that employers in the U.S. added an average of 220,000 jobs per month in 2018. This was the highest in comparison to the previous year’s average growth of 182,000 and the best since 2015.
December’s payrolls data showed that the economy added jobs for 99 consecutive months marking the longest stretch of hiring on record.
Private sector except information services contributed to the pace of hiring. Government payrolls rose 11,000 in December.
The unemployment rate, however, ticked higher to show 3.9%. This was higher than the median estimates which forecast that the unemployment rate would remain unchanged at 3.7%. The increase in the unemployment rate was seen amid the higher participation rate which ticked up to 63.1%. This was the highest participation rate since 2014 and was up from November’s reading of 62.9%.
Private sector payrolls rise in December
Ahead of the official payrolls report, data showed that the ADP/Moody’s private payroll figures surged in December. The data was seen reflecting the favorable weather with the statistics coming out stronger than the estimates during the reporting month.
ADP/Moody’s private payroll figures showed that employment rose 271,000 in December. This came after November’s private payrolls showed 157,000 jobs for the month. In November, ADP/Moody’s initially reported a headline print of 179,000.
The data for December beat estimates which forecast 178,000 jobs created during the month.
ADP said private sector employment surged up by 271,000 jobs in December after climbing by a downwardly revised 157,000 jobs in November.
The stronger than expected job growth for December showed the biggest jump in private sector hiring since February 2017. Ahu Yildirmaz, the vice-president of ADP research institute, said that the U.S. economy wrapped up 2018 with a strong month of growth in the labor market.
“Although there were increases in most sectors, the busy holiday season greatly impacted both trade and leisure and hospitality. Small businesses also experienced their strongest month of job growth all year,” Ahu Yildirmaz said.
Mark Zandi echoed similar views, chief economist for Moody’s Analytics. Zandi said, “Businesses continue to add aggressively to their payrolls despite the stock market slump and the trade war. At the current pace of job growth, low unemployment will get even lower.”
The private payrolls report showed that the services sector jumped by 224,000 jobs during the month. Other areas contributing to the net gains included sectors such as leisure, hospitality, and trade, transportation and utility industries which added a combined 72,000 jobs during the month.
The goods-producing sector contributed to the payrolls by adding 47,000 jobs during the month. This reflected an increase of 37,000 jobs in the construction sector.
On a business-size basis, ADP said that medium-sized companies added 129,000 jobs while small businesses added 89,000 jobs in December.