Economy Adds 312,000 Jobs in December and Wage Growth Creeps Upward

The Bureau of Labor Statistics reported the economy added 312,000 jobs in December. It also revised upward the reported job growth for the prior two months by 58,000, bringing the three-month average to 254,000. In spite of the strong job growth, the unemployment rate edged up to 3.9 percent. This was due to a rise in the labor force participation rate of 0.2 percentage points, as the labor force grew by 419,000. The employment-to-population ratio (EPOP) was unchanged at 60.6 percent.

Job gains were widespread across sectors. The biggest job gainer was health care, which added 50,200 jobs, well above its average of 28,800 over the last year. Restaurants were also a big job gainer, adding 40,700 jobs in December compared with an average of 19,600 over the last year. Construction added 38,000, likely aided by relatively good weather in December.

Manufacturing added 32,000 jobs in the month, in spite of the continued growth in the trade deficit. Employment in the sector is now up by 284,000 over the last year. There had been some shortening of the average workweek in manufacturing, especially in the durable sector, which limited the increase in the index of aggregate hours between July and November to just 0.1 percent overall and left it flat for durable manufacturing. However, an increase in the average workweek in December caused the overall index to rise 0.5 percentage points and the durable index to increase 0.4 percentage points.

Retail also had an unusually good month, adding 23,800 jobs, well above its average of 7,600 over the last year. The information sector shed 1,000 jobs in December. It is down by 16,000 (0.6 percent) over the last year. Telecommunications was the biggest job loser over the last year; motion pictures and publishing also lost jobs.

There was a modest pickup in wage growth in the month, with year-over-year growth in the average hourly wage of…

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