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Unemployment steady at 7.8 percent in December
The economy continued to grow steadily last month despite Washington’s impasse over the fiscal cliff, with unemployment staying at a four-year low of 7.8 percent as businesses created another 155,000 jobs, the Labor Department reported Friday morning.
The total number of jobs created in December was close to the monthly average of 153,000 in 2011 and 2012 — showing that the economy has chugged along with unspectacular but consistent growth despite the sharp volatility seen elsewhere in the political sphere and financial world in the last two years. The total number of jobs created last year was 1.84 million — the same as 2011.
“The economy may have been stronger than we thought at yearend, though it’s still not at the 200,000 to 250,000 jobs per month we’d like to see,” said Diane Swonk, economist at Mesirow Financial. She noted that government continues to be a drag on the job market, shedding 13,000 jobs during the month.
“This morning’s jobs report was status quo,” said Heidi Shierholz, analyst at the Economic Policy Institute. “The problem, of course, is that a status quo report in today’s labor market represents an ongoing jobs crisis” for the 12.2 million people who are still looking for work.
Some sectors fared better than others. Health care led in generating 45,000 new jobs last month, and manufacturing and construction sprang back to life with an additional 25,000 and 30,000 openings, respectively.
But despite a promising start to the Christmas season, it turned out to be mostly average in its impact on the job market, with no net gains in jobs in the retail industry in December after a surge of early hiring in November.
In an upbeat note, workers took home more pay during the month, with average hourly earnings jumping by 7 cents to $23.73, bringing the yearly gain to 2.1 percent — a noticeable improvement from the below-2 percent readings in previous months.
The surge in pay suggests that employers may have raced to provide bonuses ahead of the year-end deadline so that workers could take advantage of lower tax rates that were in effect in 2012 for both income and payroll taxes.
The 7.8 percent unemployment rate reflects annual revisions made by the department in its seasonal adjustment factors. Under those revisions, the rate fell to 7.8 percent in November, a four-year low, rather than the originally reported 7.7 percent.
Not all were impressed by the latest jobs numbers.
“For yet another month the U.S. economy has turned in a mediocre performance,” said Martin Regalia, chief economist at the U.S. Chamber of Commerce. “The work week and the wage rate showed some slight improvement, but not enough to offset the negatives from the recent tax hikes.”
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