The U.S. economy added 292,000 employees to payrolls in December, the Bureau of Labor Statistics announced Friday, with the main unemployment rate holding steady at 5 percent. The numbers, which greatly exceeded the consensus estimate of 200,000 jobs, follows the Federal Reserve’s decision last month to raise interest rates for the first time since 2006.
The Bureau of Labor Statistics also issued upward revisions for the two previous monthly totals, with November rising to 252,000 from 211,000.
December’s tally caps what Société Générale senior economist Brian Jones called in a note to clients a “banner year for hiring,” one that saw payrolls grow by an average 217,000 jobs a month. The preliminary total of 2.7 million new spots on payrolls for 2015, however, fell short of the 3.1 million jobs added in 2014.
The report comes as markets weather the spillover from resumed volatility in China, underscoring the slowing pace of the world’s second-largest economy. But consumer demand and spending remained strong in the final months of 2015, creating what IHS economist Nariman Behravesh called “bifurcated economy.”
“The domestically focused industries are doing quite well,” Behravesh said. “The big weakness mostly is on the export side.”
Sluggish growth in Europe and a slowing economy in China — together with a strengthening dollar, which hurts exports — have roiled markets and dragged on U.S. manufacturers. Workers in the energy industry, meanwhile, have been crushed by the continued slide in the price of oil.
The mining sector lost 8,000 jobs in December, while employment in manufacturing continued to stagnate. But the upside is that only around 10 percent of the U.S. economy relies heavily on exports. Meanwhile, the service sector has been “on a roll,” Behravesh said.
Job postings on Indeed.com reached a record high in late 2015, with demand rising in all industries and at both high- and low-skill levels, said Tara Sinclair, chief economist for the job posting website. “Overall we are seeing strong job creation on both sides of the spectrum. The concern remains in the middle,” Sinclair said.
Wage gains, which have been elusive for much of the post-recession recovery, remained subdued. Hourly earnings ticked up 2.5 percent year-over-year. As the Fed mulls additional interest rate hikes in 2016, policymakers will be searching for evidence of sustained wage gains to indicate the economy has approached full employment.
A measure of unemployment that includes part-timers who want full-time jobs and those who have given up looking for employment held steady at a seasonally adjusted 9.9 percent.
The labor force participation rate, which tracks the share of adults employed or looking for work, inched up to 62.6 percent. Meanwhile the ratio of employed workers to the overall population for prime-age workers — those between 25 years and 54 years old — paused at 77.4 percent, still well below pre-recession levels.
“In times past we would have said 5 percent is full employment,” Behravesh said. “We’re not seeing that now. You have to believe there is more slack in the labor market than the standard unemployment rate would suggest.”