Arab Today, arab today us payrolls surge in boost to economic outlook
Last Updated : GMT 16:05:04
Arab Today, arab today
Arab Today, arab today

US payrolls surge in boost to economic outlook

Arab Today, arab today

Arab Today, arab today US payrolls surge in boost to economic outlook

A waitress carries food to be served at the Waveland Cafe in Des Moines, Iowa
Washington - Arab Today

US payrolls surged in December and the job count for the prior two months was revised sharply higher, showing the economy on solid ground despite a troubling international backdrop.
Nonfarm payrolls increased by 292,000 last month, the Labor Department said. The unemployment rate held steady at a 7-1/2-year low of 5 percent even as more people entered the labor force, a sign of confidence in the job market.
Payrolls for October and November were revised to show 50,000 more jobs created than previously reported, adding to the report’s upbeat tone. The only wrinkle was a one cent drop in average hourly earnings.
The robust employment data helped soothe fears about the economy’s health, and suggested recent weakness would largely be contained to the manufacturing and export-oriented sectors, which have been hit by a strong dollar and anemic global demand. Efforts by businesses to whittle down an inventory glut and spending cuts by energy companies have also inflicted pain.
“It is one more sign the domestic economy continues to chug along,” said Kate Warne, investment strategist at Edward Jones in St. Louis.
“It is not a game changer in terms of faster economic growth, but it offsets some of the other indicators that recently have suggested the economy might be slowing down.”
The data helped staunch the bleeding on Wall Street, with US stocks rising at the open after the worst four-day start to a year ever. The dollar moved higher, while prices for US government debt fell, as traders ramped up bets the Federal Reserve would raise interest rates in March.
“This certainly supports the Fed’s intent to hike rates in March,” said Krishna Memani, chief investment officer at OppenheimerFunds in New York.
“There’s nothing in the data so far to take them away from the four hikes (expected) this year.”
Fears over the health of China’s economy, the world’s second-largest after the US, had spooked investors worldwide. But signs of stability emerged overnight after China ditched a market circuit breaker and guided its currency higher.
Economists, who had slashed fourth-quarter growth forecasts on recent soft economic data, had expected US payrolls to increase by only 200,000 jobs last month. Even with the strong showing at year end, payroll growth was softer last year than in 2014, with 2.65 million jobs created compared with 3.1 million.
FOCUS ON WAGE GROWTH
While the labor market’s resilience could spur Fed policymakers to hike rates in March, some economists said low inflation and the recent turmoil in financial markets could still stay their hand.
The US central bank last month raised overnight rates by a quarter percentage point to between 0.25 and 0.50 percent, the first increase in nearly a decade, and a subsequent move at its next meeting this month was already seen as off the table.
With the Fed focused on inflation, wage growth is under scrutiny. Economists said December’s decline in earnings could simply be due to a quirk of the calendar. Despite the drop, the year-on-year gain moved up to 2.5 percent from 2.3 percent in November, although that reflected an unusually weak December 2014.
Also being watched closely is the labor force participation rate, or the share of working-age Americans who are employed or at least looking for a job. While the rate increased one-tenth of a percentage point to 62.6 percent in December, it remains near four-decade lows.
There are concerns persistently low participation could hamper job growth as the supply pool of workers shrinks, unless a pick-up in earnings entices more Americans to return to the labor force.
The employment-to-population ratio increased to 59.5 percent, its highest level since May 2009, from 59.4 percent in November.
Employment gains in December were concentrated in the services sector, with mining shedding 8,000 jobs. Employment in the mining sector declined by 129,000 in 2015 and more losses are likely after the price of oil this week tumbled to an 11-year low.
Oilfield services provider Schlumberger last month announced another round of job cuts in addition to 20,000 layoffs already reported in 2015.
The company said it expected the slowdown in drilling activity to continue this year.
Manufacturing added 8,000 jobs last month and unusually warm weather boosted construction payrolls, which increased by 45,000.
There were also gains in the leisure and hospitality sector.
Retail payrolls rose only 4,300 as the mild temperatures hurt sales of winter apparel. Temporary help increased 34,400 last month and government payrolls rose 17,000.
Source: Arab News

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