Economists Expect Strong Job Growth In December
RENEE MONTAGNE, HOST:
Here in the U.S., we learned today that the economy created more than a quarter of a million new jobs in December, capping off the strongest year of job growth in 15 years. The unemployment rate also fell, but as NPR's John Ydstie reports, the data for December also included some disappointments on wages and workforce participation.
JOHN YDSTIE, BYLINE: First, the good news - according to the government's data, U.S. employers added 252,000 jobs last month. That exceeded the forecast of many economists, including Carl Tannenbaum of Northern Trust in Chicago.
CARL TANNENBAUM: This morning's readings on payroll creation were undoubtedly very strong, both with the reading for December, which was very good, and the upward revisions to the prior two months.
YDSTIE: The upward revisions put the average job growth in the past three months close to 300,000. The strong employment growth helped push the unemployment rate down two-tenths to 5.6 percent. Unfortunately, the forces behind that fall weren't all positive.
TANNENBAUM: Part of the reason for that, unfortunately, was a decline in labor force participation, which is a trend that we have been hoping will stabilize as those discouraged by poor labor market conditions eventually return to the labor market.
YDSTIE: But instead, more workers quit looking for a job and left the labor force. Part of that is due to older baby boom workers retiring, says Tannenbaum, but it also suggests the economy isn't creating enough opportunities to draw many people back into the labor force.
TANNENBAUM: And they are clearly people who are outside the labor force looking in who would like to rejoin it.
YDSTIE: Another disappointment in the December data was a fall in wages. November's report showed an uptick that created some confidence that sluggish wage growth was picking up. Instead, wages fell two-tenths of a percent. Tannenbaum suggests that could ease concerns about inflation at the Federal Reserve and keep the focus on jobs.
TANNENBAUM: With wages falling off a little bit, it certainly doesn't seem imminent that the Federal Reserve would be increasing interest rates.
YDSTIE: Overall, says Tannenbaum, the positives jobs picture is one of several factors lifting the U.S. economy as the new year begins.
TANNENBAUM: The jobs created and the incomes that come with them will be good for consumer spending. We're likely to have less of a fiscal drag from government austerity. Sectors like housing and investment, which have been a little slower than usual, should also kick in.
YDSTIE: Add to that the benefits of falling energy prices, and Tannenbaum says it suggests 2015 will be a very positive year for the U.S. economy. John Ydstie, NPR News, Washington.