The US economy’s job creation ability disappointed in December, despite solid hiring in manufacturing and construction, according to government data yesterday.
While the unemployment rate held steady at the 17-year low of 4.1 per cent, employers added just 148,000 new hires in the final month of the year, far below expectations, and even below the sluggish 155,000 reported in December 2016.
Economists had been expecting 200,000 new jobs or more last month, especially after payroll services firms ADP said on Thursday that private hiring surged by 250,000 in the month. While the ADP report can be volatile, it prompted some economists to revise their forecasts upwards.
Revisions to the October and November data subtracted 9,000 jobs from the economy, making the picture for the fourth quarter even more disappointing.
Job creation in the final three months of the year averaged 204,000, the Labour Department said.
The slowing could point to an economy nearly at full employment that is finding it hard to find workers to fill open positions, a sentiment reflected in anecdotal reports from companies in many surveys.
Many firms have reported the need to raise wages to attract new workers, and that was reflected in the increase in average hourly earnings to US$26.63 from US$26.54 in the prior month, and from US$25.98 at the end of 2016.
That marks a 2.5 per cent increase in wages over last year, slightly ahead of consumer inflation.
The manufacturing sector added 25,000 new jobs in December, while the construction sector added 30,000, and health care added 29,000.
But retail employment fell by 20,000, and professional and business services slowed sharply to a gain of just 19,000 after two months with increases of close to 50,000.
For all of last year, construction employment increased by 210,000, compared to 155,000 in 2016, while manufacturing saw a gain of 196,000, about the same as the prior year.
Business and professional services jobs rose 527,000 for the year, about the same as 2016, while retail jobs declined 67,000 after adding 203,000 a year earlier.