December hiring remained steady, with employers adding 145,000 jobs
Employers added 145,000 jobs in December, closing a year that has seen businesses expand at a more modest pace. The U.S. unemployment rate stayed steady at 3.5%, the Labor Department said.
Jobs were added in retail, health care and leisure and hospitality, but dropped in mining, manufacturing and transportation and warehousing.
In 2019, monthly employment gains averaged about 176,000 — the slowest rate of job growth since 2011, although more than enough to keep unemployment from rising.
The stock markets rose modestly on the report, with the Dow crossing the 29,000 mark shortly in early trade before falling back to 28,980. The S&P 500 and Nasdaq also inched up.
Wage growth is slowing from 2019, a sign there continues to be some slack in the job market despite the lowest unemployment rate in half a century. Average hourly earnings in December grew 2.9% from the prior year, the slowest rate of growth since summer 2018.
"A healthy jobs number, but lackluster wage growth is not news workers want to hear," Robert Frick, corporate economist at Navy Federal Credit Union, said in a note. "Given the labor market is tightening, that wages only grew at a 2.9% rate in the last year is another argument that something has fundamentally changed in the economy."
Added Andrew Chamberlain, chief economist at Glassdoor: "Today's report was a microcosm of the whole decade of the 2010s. Middle-of-the road job gains and disappointing pay growth has been the story for a long time."
Relying on consumers
Goods-producing sectors had a subdued month, capping off a year in which they were whipsawed by trade war concerns. Manufacturing fell by a modest 12,000 jobs in December, but eked out a gain of 46,000 jobs over the year.
"It's not a manufacturing recession as much as a manufacturing slowdown," said Julia Pollak, labor economist at ZipRecruiter.
However, since manufacturers account for a shrinking share of the broader job market and only some 12% of U.S. economic activity, trouble in that sector wouldn't have an outsize effect on overall job-creation, she added.
Instead, consumer spending has kept the economy expanding steadily. Professional and business services and the leisure sector drove much of the past year's job gains, each contributing about 390,000 new jobs. Meanwhile, as shopping keeps moving online, job growth in transportation and warehousing has been double the job losses in the retail sector, according to ZipRecruiter data.
"Consumer spending has remained strong, largely because household balance sheets are looking very good," Pollak said. "These steady engines of economic growth just kept on chugging."