Published: Tue, January 09, 2018
Markets | By Rosalie Gross

Labor Dept.: December jobs lower than expected at 148000

Labor Dept.: December jobs lower than expected at 148000

The US economy's job creation ability disappointed in December, despite solid hiring in manufacturing and construction, according to government data reported late Friday.

Job creation in the final three months of the year averaged 204,000, the Labor Department said. The number of unemployed people, at 6.6 million, was essentially unchanged over the month.

Through a year ago, the black unemployment rate rose to 8 percent in March and fell back to 7 percent in September before falling again in December.

Non-farm payrolls rose by 148,000, the Labor Department said - far lower than the revised figure of 252,000 created in November. Retailers cut 20,300 positions during the height of the holiday-shopping season, bringing total gains among service providers to 91,000, down from 176,000 in November. U.S. Treasury Secretary Steven Mnuchin argues that a fuller unemployment measure should include "discouraged workers" who have stopped looking because they thought there were no openings.

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Although the inventory shortage has continued to rage on, the Employment Situation Summary for December 2017 from the U.S Bureau of Labor Statistics (BLS) shows there could be some relief on the way. "Jobs drive housing demand and with the unemployment rate remaining at its lowest level of the millennium, it's only going to pick up". "It was a good year last year". It outpaced inflation but fell below last year's 2.9 percent.

Any deviation from recent wage trends in Friday's report would likely jolt equity and bond markets. Blockbuster job growth and rapid pay increases would have stoked fears that inflation could accelerate and potentially have nudged the Fed toward quicker rate hikes - something many stock investors fear. That could potentially unleash a faster pace of wage growth and translate into a much stronger increase in inflation than now anticipated. Employment gains were largely broad-based in December.

The biggest gains were in healthcare, with 31,000 jobs; construction trades, with 30,000 jobs, and manufacturing, with 25,000 jobs. When economists talk about full employment, they don't mean everybody has a job. Job growth remains steady and is underpinning an economy that's both contributing to and benefiting from an improved global outlook. General merchandise stores payrolls tumbled by 27,300 in December, with employment at clothing stores dropping by 3,800 jobs. Manufacturing, an industry that President Trump has sought to boost, added nearly 200,000 jobs past year, a turnaround from 2016, when it lost jobs. Sears Holdings Corp said on Thursday it was shuttering 103 unprofitable Kmart and Sears stores.

Although some economists are hopeful about the steady growth, others aren't sure that it's enough to reach the 50-year average of 1.5 million residential construction starts.

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