Hiring surged in December, employers added 312,000 jobs
US employers added 312,000 jobs in December, well above what economists expected and underlining that the American economy remains strong despite recent market turbulence.
The unemployment rate rose to 3.9% as more people were looking for work. It had been at a 50-year low of 3.7% for two of the last three months.
Employers added 2.6 million jobs in 2018, compared to 2.2 million in 2017. Revisions to the October and November estimates added an additional 58,000 jobs to the 2018 total.
Economists had expected the pace of hiring would slow in December, as employers had trouble finding the workers they needed. The median forecast of economists surveyed by Refinitiv was for 177,000 new jobs. Instead, employers added the highest number of jobs since February 2018, and the second-highest number of jobs added during any month of the Trump administration.
Paychecks grew as employers raised wages to attract new workers. Average hourly pay was up 3.2% compared to a year earlier. The average number of hours people worked also edged up.
“It appears that higher wages are the reason why people are returning to the active labor force in large numbers,” said Paul Ashworth, chief US Economist with Capital Economics.
But the wage growth could worry investors who were hoping the Federal Reserve might pull back on its interest rate hikes. The strong wage gain makes a policy change unlikely.
“Overall, the markets may have decided the Fed’s work is done, but the economic data say otherwise,” said Ashworth.
Stocks headed higher following the report.
The unemployment rate rose because more than 400,000 people joined the labor force looking for jobs. The percentage of the working-age people in the work force matched a five-year high.
“Yes, the nation’s unemployment rate rose to 3.9%, but for the best of reasons,” said Mark Hamrick, Bankrate.com senior economic analyst. “That’s a deal we’ll take if more people are participating in the workforce.”
Job gains were widespread, with construction, manufacturing, health care and leisure and hospitality all posting gains of more than 30,000 jobs.
The report did not include the impact of about 380,000 federal workers who were furloughed in December because of the government shutdown. That’s because the data for Friday’s report was collected before the shutdown started on December 22.
The Labor Department will remain funded during the shutdown, so the preparation of Friday’s and future reports was not affected. But if the shutdown continues through next week, the number of workers on furlough could show up in the January survey. That could mean the January jobs report released next month would show a drop rather than a gain in employment.