Job creation eased last month but workers are seeing long-awaited wage gains, signs that more than seven years into a slow-growing expansion the labor market is improving enough to reap payoffs for American households.
Nonfarm payrolls rose a seasonally adjusted 156,000 in December from the prior month, a slowdown from November’s more robust gain, the Labor Department said Friday. The unemployment rate ticked up to 4.7%, but finished 2016 at the lowest point to end a year in a decade.
Though hiring finished the year on a soft note, cumulative hiring has reduced enough slack in the labor market to force employers to pay more for talent. Wages increased 2.9% in December from a year earlier, the best annual rate since 2009 and a contrast to gains closer to 2% earlier in the expansion.
The report affirms that President-elect Donald Trump inherits an economy on a steady but unspectacular path as he prepares to take the oath of office.
“For the first time in a while, people are seeing some growth in the economy, and consumers are seeing raises beyond the bare minimum,” said John McAuliffe, chief executive of Sylvan Learning, a Maryland-based tutoring company which is looking to hire about 500 teachers for its centers. “People feel more confident about their own job prospects.”
For all of 2016, the economy added just under 2.2 million jobs, the smallest gain for a calendar year since 2012.
The combination of emerging wage gains and steady hiring likely keeps the Federal Reserve on a path toward raising short-term interest rates cautiously and gradually in the months ahead. Fed officials have penciled in three quarter-percentage-point increases to their benchmark interest rate this year.
December, the final full month of President Barack Obama’s term, was the 75th straight month U.S. employers added jobs. It extended the longest such stretch on record back to 1939. The unemployment rate is well down from a peak of 10% early in Mr. Obama’s presidency.
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