US economy adds 155K jobs; rate remains 7.8 pct.

WASHINGTON (AP) — U.S. employ­ers added 155,000 jobs in Decem­ber, a steady gain that shows hir­ing held up dur­ing the tense nego­ti­a­tions to resolve the fis­cal cliff.

The solid job growth wasn’t enough to reduce the unem­ploy­ment rate, which remained 7.8 per­cent last month, the Labor Depart­ment said Fri­day. The rate for Novem­ber was revised up from an ini­tially reported 7.7 percent.

Each Jan­u­ary, the gov­ern­ment updates the monthly unem­ploy­ment rates for the pre­vi­ous five years. The rates for most months don’t change.

The gov­ern­ment said hir­ing was stronger in Novem­ber than it first esti­mated. November’s job increases were revised up 15,000 to 161,000. October’s increase was nearly unchanged at 137,000.

The “gain is per­haps bet­ter than it looks given that firms were prob­a­bly ner­vous about adding work­ers with the fis­cal cliff loom­ing,” said Paul Ash­worth, an econ­o­mist at Cap­i­tal Economics.

Even so, hir­ing hasn’t been strong enough to quickly reduce still-high unem­ploy­ment. The job gains for Decem­ber almost exactly matched the aver­age monthly pace for the past two years. Hir­ing has been steady but mod­est as the econ­omy has grad­u­ally improved.

For 2012, employ­ers added 1.84 mil­lion jobs, an aver­age of 153,000 jobs a month, roughly match­ing the job totals for 2011.

Robust hir­ing in man­u­fac­tur­ing and con­struc­tion fueled the Decem­ber job growth. Con­struc­tion firms added 30,000, the most in 15 months. That increase likely reflected hir­ing needed to rebuild after Super­storm Sandy and also gains in home build­ing that have con­tributed to a hous­ing recovery.

Man­u­fac­tur­ers added 25,000 jobs, the most in nine months.

Other higher-paying indus­tries also added jobs. Pro­fes­sional and busi­ness ser­vices, which include posi­tions in infor­ma­tion tech­nol­ogy, man­age­ment and archi­tec­ture, gained 19,000. Finan­cial ser­vices added 9,000, health care 55,000.

Lower-paying indus­try sec­tors were mixed. Restau­rants and bars added 38,000 jobs. Retail­ers cut 11,300, a sign that the hol­i­day shop­ping sea­son might have been slug­gish. But those cuts fol­lowed three months of strong gains.

All the job gains last month came from pri­vate employ­ers. Gov­ern­ments shed 13,000 jobs, mostly in local school systems.

The sta­ble hir­ing pace last month shows that employ­ers didn’t panic dur­ing the high-stakes talks between Con­gress and the White House over tax increases and spend­ing cuts that weren’t resolved until New Year’s.

That’s an encour­ag­ing sign for the com­ing months, because an even big­ger fed­eral bud­get show­down is loom­ing. The gov­ern­ment must increase its $16.4 tril­lion bor­row­ing limit by around late Feb­ru­ary or risk default­ing on its debt. Repub­li­cans will likely demand deep spend­ing cuts as the price of rais­ing the debt limit.

Friday’s report did point to some weak­ness in the job mar­ket. For exam­ple, the num­ber of unem­ployed actu­ally rose 164,000 to 12.2 mil­lion. Approx­i­mately 192,000 peo­ple entered the work force last month, but most of them didn’t find jobs.

The unem­ploy­ment num­bers come from a gov­ern­ment sur­vey of house­holds; the num­ber of jobs added each month comes from a sep­a­rate sur­vey of businesses.

A broader cat­e­gory that includes not only the unem­ployed but also part-time work­ers who want full-time jobs and peo­ple who have given up look­ing for work was unchanged in Decem­ber at 22.7 million.

Despite the still-modest job growth, the econ­omy is improv­ing. Lay­offs are declin­ing. And the num­ber of peo­ple who sought unem­ploy­ment aid in the past month is near a four-year low.

The jobs report showed that hourly pay is stay­ing slightly ahead of infla­tion. Hourly wages rose 7 cents to $23.73 last month, a 2.1 per­cent increase com­pared with a year ear­lier. Infla­tion rose 1.8 per­cent over the same period.

The once-depressed hous­ing mar­ket is recov­er­ing. Com­pa­nies ordered more long-lasting man­u­fac­tured goods in Novem­ber, a sign that they’re invest­ing more in equip­ment and soft­ware. And Amer­i­cans spent more in Novem­ber. Con­sumer spend­ing dri­ves nearly 70 per­cent of eco­nomic growth.

Man­u­fac­tur­ing is get­ting a boost from the best auto sales in five years. Car sales jumped 13 per­cent in 2012 to 14.5 mil­lion. And Amer­i­cans spent more at the tail end of the hol­i­day shop­ping sea­son, boost­ing over­all sales that had slumped ear­lier in the cru­cial two-month period.

Most econ­o­mists expect lit­tle improve­ment this year. A 2 per­cent­age point cut in the Social Secu­rity tax expired Jan. 1. That means a house­hold with income of about $50,000 will have about $1,000 less to spend. And the gov­ern­ment will may impose spend­ing cuts this year.

Both the higher taxes and spend­ing cuts, along with uncer­tainty about the future bud­get fights, will likely restrain growth and hiring.

That “likely means accel­er­a­tion in the labor mar­ket will remain elu­sive for the time being,” said Ellen Zent­ner, an econ­o­mist at Nomura Securities.

Posted by Matt Echelberry on Jan 4 2013. You can follow any responses to this entry through the RSS Feed. Both comments and pings are currently closed.