Healthcare, manufacturing among winners in December jobs report
Job growth was strong in 2016, yet not as robust as in 2015. Some believe that the economy is nearing full employment, with a dearth of workers who can fill the jobs that are available.
The US economy added 156,000 jobs in December, with the biggest gains in the healthcare industry, which expanded by 43,000 jobs, according to US Bureau of Labor Statistics employment data released Friday.
Notably, manufacturing workers finally saw relief in December when that industry added 17,000 jobs. This was after months of declines amid a shrinking energy sector slammed by low oil prices, and amid a strong dollar that hurts US companies that export goods and services to countries with weakening currencies, such as Japan, China, and members of the European Union.
Another modest highlight for workers in December was a .4 percent bump in average hourly earnings from November. This reflected an increase of 10 cents to $26 an hour, according to the labor department report, and helped push average 2016 earnings up 2.9 percent, the biggest hike since June 2009.
Other labor market indicators in December reflected upward trends that have been percolating throughout the year, all reflecting a solid economy to that will be handed over to Donald Trump by President Obama’s administration. Mr. Obama took over the White House during the biggest recession since the Great Depression of the 1930s.
The unemployment rate last month also remained low, reaching near pre-recession levels, and way below a 10 percent peak during the height of the recession. Though December’s rate rose to 4.7 percent from 4.6 percent in November, the rise is a symptom of a positive trend, according to business analytics firm IHS Markit. The labor force grew by 184,000 last month, adding more people to the job statistics pool which can cause the unemployment rate to rise.
“At this pace of growth, we can expect to continue to see improvements in the labor market over the next couple of years as we approach full employment,” wrote Elise Gould, senior economist at the Economic Policy Institute, a think tank, in a newsletter Friday.
Though economists expect the economy to grow modestly through next year, with wages expected to rise by 3 to 3.5 percent, some worry that many Americans who lost jobs during the Great Recession have not come back to work. The labor force participation rate, which tracks people over 16 years old who are working or looking for jobs, in December was 62.7 percent, down from 66.4 in December 2006, according to the labor department.
Some of this decline can be attributed to retiring baby boomers, as Business Insider points out. But not all of it. Workforce participation among working-age Americans has been declining for decades, and has been especially low after the recession. In part this has to do with a shift in the labor market that makes it much harder to earn a living wage without post-secondary education. Some economists worry that among those who are not returning to the workforce are Americans who don’t have the skills and training for the jobs that employers say they are struggling to fill, from machinists to health technicians.
This could help explain why the economy added fewer jobs in 2016 than in 2015, says IHS chief economist Nariman Behravesh: 2.2 million versus 2.7 million.
“We can hope that there are still some discouraged workers who might come back, though that pool is diminishing,” Dr. Behravesh says.
But with the labor market having absorbed most available workers, businesses will become more eager to fill open slots, which should continue raise wages. Economists expect the unemployment rate to stay low, around 4.5 percent, in 2017.