WASHINGTON (AP) — A healthy month of hiring in December capped the best year for US job growth since 1999, demonstrating that employers are more confident than they’ve been since the Great Recession began.
Nearly 3 million jobs were added in 2014, and continued solid hiring is expected to propel the economy this year to its fastest growth in a decade. The gains are putting further distance between the strengthening American economy and struggling nations overseas.
“Last year was a truly breakout year for the labour market,” said James Marple, an economist at TD Securities. “Businesses are increasingly looking to hire.”
Friday’s report from the Labor Department showed that employers added 252,000 jobs in December and 50,000 more in October and November combined than the government had previously estimated. The unemployment rate dropped to 5.6 per cent from 5.8 per cent in November. The rate is now at its lowest point since 2008.
The government’s report did point to some weaknesses, notably in Americans’ paychecks, which have barely kept ahead of inflation during the 5½-year recovery. In December, average hourly pay actually fell.
“The continued listless performance of hourly earnings is an ongoing frustration,” said Richard Moody, an economist at Regions Financial.
And one reason the unemployment rate fell last month had nothing to do with more hiring: Many of the jobless gave up looking for work and so were no longer counted as unemployed.
Still, while December’s hiring did not match November’s huge 353,000 gain, job growth in the final three months of 2014 averaged a robust 289,000. That was up sharply from the 239,000 average for the third quarter of 2014.
The unemployment rate is now near the 5.2 per cent to 5.5 per cent range that the Federal Reserve considers consistent with a healthy economy — one reason the Fed has been expected to raise interest rates from record lows by midyear.
Yet for now, the plummeting oil prices and weak pay growth are helping keep inflation even lower than the Fed’s 2 per cent target rate. Many economists think inflation may fail to reach even 1 per cent this year. A result is that the Fed could feel pressure to avoid raising rates anytime soon.
“There is still room for stimulus without having to worry about inflation taking off,” said Michael Strain, an economist at the American Enterprise Institute.
Most economists forecast that the US economy will expand more than 3 per cent this year. If it does, 2015 would mark the first time in a decade that growth has reached that level for a calendar year.
In December, hiring was widespread across most industries. Construction firms added 48,000 jobs, the most since January. Manufacturers gained 17,000, restaurants and bars 44,000.
One industry where hiring slowed in December was retailing, which cut back after having staffed up in November for the holiday shopping season.