Strong December Jobs Report Caps Off The Best Year For Jobs Growth Since 1999

December's jobs growth numbers were very good, but the numbers below the headlines show that there's still work to be done.

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Without question, 2014 has been the best year for jobs since the Great Recession ended in 2009. For the first time, monthly jobs growth has exceeded 200,000 new jobs each month of the year, which itself is something we had not seen in the previous four years, and for most of the year has averaged roughly 220,000 new jobs per month. In recent months, we’ve seen compellingly strong numbers, especially last month’s release of the November report, which saw some of the best jobs creation we’d seen in years. Heading in to the December report’s release today, the consensus among forecasters was for another mostly positive month, albeit one that was not nearly as good as November. As it turned out, the news for December was mostly good news, but there are several caveats that suggest yet again that the labor market is far from robust even this far out from the end of the recession

Total nonfarm payroll employment rose by 252,000 in December, and the unemployment rate declined to 5.6 percent, the U.S. Bureau of Labor Statistics reported today. Job gains occurred in professional and business services, construction, food services and drinking places, health care, and manufacturing.

The unemployment rate declined by 0.2 percentage point to 5.6 percent in December, and the number of unemployed persons declined by 383,000 to 8.7 million. Over the year, the unemployment rate and the number of unemployed persons were down by 1.1 percentage points and 1.7 million, respectively. (See table A-1.)

Among the major worker groups, the unemployment rate for adult women (5.0 percent) decreased by 0.2 percentage point in December, while the rates for adult men (5.3 percent), teenagers (16.8 percent), whites (4.8 percent), blacks (10.4 percent), and Hispanics (6.5 percent) showed little change. The jobless rate for Asians, at 4.2 percent (not seasonally adjusted), changed little from a year earlier. (See tables A-1, A-2, and A-3.)

(…)

Total nonfarm payroll employment increased by 252,000 in December. In 2014, job growth averaged 246,000 per month, compared with an average monthly gain of 194,000 in 2013. In December, employment increased in professional and business services, construction, food services and drinking places, health care, and manufacturing. (See table B-1.)

Employment in professional and business services rose by 52,000 in December. Monthly job gains in the industry averaged 61,000 in 2014. In December, employment increased in administrative and waste services (+35,000), computer systems design and related services (+9,000), and architectural and engineering services (+5,000). Employment in accounting and bookkeeping services declined (-14,000), offsetting an increase of the same amount in November.

Construction added 48,000 jobs in December, well above the employment gains in recent months. Specialty trade contractors added jobs in December (+26,000), with the gain about equally split between residential and nonresidential contractors. Employment also increased in heavy and civil engineering construction (+12,000) and in nonresidential building (+10,000).

In December, employment in food services and drinking places increased by 44,000. The industry added an average of 30,000 jobs per month in 2014.

Health care added 34,000 jobs in December. Job gains occurred in ambulatory health care services (+16,000), nursing and residential care facilities (+11,000), and  hospitals (+7,000). Employment growth in health care averaged 26,000 per month in 2014 and 17,000 per month in 2013.

In December, manufacturing employment increased by 17,000, with durable goods (+13,000) accounting for most of the gain. Manufacturing added an average of 16,000 jobs per month in 2014, compared with an average gain of 7,000 jobs per month in 2013.

Employment in wholesale trade and in financial activities continued to trend up in December.

Employment in retail trade changed little in December, following a large gain in November. Employment in other major industries, including mining and logging, transportation and warehousing, information, and government, changed little in December.

As is typically the case, there were revisions for the previous two months, with October job growth being revised upward from 243,000 to 261,000, and November job growth being revised upward from 321,000 to 353,000. Additionally, there was a slightly drop in the long-term unemployment rate, although that may in part be attributable to a drop in labor force participation, although the employment rate remained unchanged. The one damper on the good news of the top-line numbers came in the details:

The average workweek for all employees on private nonfarm payrolls was unchanged at 34.6 hours in December. The manufacturing workweek edged down by 0.1 hour to 41.0 hours, and factory overtime edged up by 0.1 hour to 3.6 hours. The average workweek for production and nonsupervisory employees on private nonfarm payrolls edged up by 0.1 hour to 33.9 hours. (See tables B-2 and B-7.)

In December, average hourly earnings for all employees on private nonfarm payrolls decreased by 5 cents to $24.57, following an increase of 6 cents in November. Over the year, average hourly earnings have risen by 1.7 percent. In December, average hourly earnings of private-sector production and nonsupervisory employees decreased by 6 cents to $20.68. (See tables B-3 and B-8.)4

What these number suggest is that there is that the demand for jobs is still low enough compared to supply that employers are not feeling pressure to increase wages or overall compensation to compete for applicants. That, combined with changes in productivity that mean that the average worker is able to get far more work done in a given period of time, means that wages are not increasing as fast as they’d be expected to at this point in the labor market cycle. An additional factor that may be playing a role here are the mandates that the Affordable Care Act puts in place which tie the obligation to for employers to provide health care coverage to the number of employees working a certain number of hours over a given period. By cutting back on hours for some employees, employers are able to control health care costs as well, which accounts for a significant expense on the balance sheets of many businesses, and especially small and medium-sized businesses with thin profit margins.

Notwithstanding the wage segment of the report, The New York Times  is largely positive about the numbers, and sees signs of a good 2015:

Capping the best year for the job market since the recession began eight years ago, employers added 252,000 jobs in December, the Labor Department reported Friday, and unemployment fell to 5.6 percent. The unemployment rate was last that low in June 2008.

The number of new people put on payrolls last month was above what economists had forecast, consistent with the view that recovery is finally gaining traction after years of only modest growth. In addition, the number of jobs created in November was revised upward to 353,000, from 321,000. That month, the unemployment rate was 5.8 percent.

“The economy has some momentum,” said Robert Shapiro, chairman of Sonecon, an economic consultant firm, in an interview before the labor report. “I think it’s kind of hit a stride with respect to job creation.”

Optimism over the wage gains of November, when average hourly earnings rose 0.4 percent, was tempered by December’s results, which showed a decreased of 0.2 percent. In a long recent stretch, earnings either fell short of or barely outpaced the inflation rate.

“Eventually a healthier labor market should translate into decent wage growth,” said Elise Gould, a senior economist for the Economic Policy Institute, in a note before the release of the jobs numbers. “The question is, when will workers start seeing the decent economic news reflected in their paychecks?”

For now, 2015 is shaping up to be the year of the consumer, with benefits from lower prices for imported goods as well as falling oil prices, which are offering a windfall. One economist likened the lower prices to the equivalent of a decent pay raise of about $1,000 a person for the year, if prices stay low.

“There are tremendous tailwinds for consumers,” said Mark Zandi, chief economist for Moody’s Analytics. “There’s nothing stopping them from spending more. There are more jobs, better wage growth, rising housing values — confidence is improving and now there’s a sharp decline in gasoline prices.”

The drop in oil prices represents a substantial transfer of income from oil producers to oil consumers, said Kevin Logan, a chief economist for HSBC Bank. American oil producers have announced plans to shut dozens of rigs, though, and workers are expected to lose jobs. The economies in oil- and shale-producing regions like Louisiana and North Dakota might suffer.

“Every dollar gained is a dollar lost, but the benefits are widespread and the losses are concentrated and will be small,” Mr. Logan

CNBC is more circumspect:

Job creation kept the pace in December, with the U.S. economy creating 252,000 jobs to close out the year, while the unemployment rate dropped to 5.6 percent.

The U.S. was expected to create 240,000 jobs in December, after adding an unexpectedly strong 353,000 jobs the prior month. The unemployment rate was seen falling to 5.7 percent from 5.8 percent a month earlier. An alternative measure that includes the underemployed and those who have stopped searching for employment also fell, moving from 11.4 percent to 11.2 percent, its lowest reading since October 2008.

After initially reacting positively to the report, markets changed direction with stocks opening in negative territory.

Businesses had been creating jobs at a monthly pace of 224,000, though wage growth remained modest and the drop in the headline rate had come in large part due to a decline in the labor force participation rate. Indeed, the participation rate continued to plummet, falling to a fresh 37-year low of 62.7 percent.

Job quality did not fare well either, with wages actually declining for the month by 5 cents an hour, pulling the annualized gain down to 1.7 percent. The average work week held steady at 34.6 hours. However, the amount of full-time workers surged by 427,000 while part-time positions dropped by 269,000.

“It was generally a decent report,” said Marie Schofield, chief economist at Columbia Investment Management. “The trends are strengthening.”

Professional and business services led the way, with 52,000 new positions. Construction added 48,000, while bars and restaurants hired another 44,000 workers.

The holiday shopping season did nothing to help the retail trade, however, with the Labor Department reporting little change in payrolls after a jump in November.

While it’s important not to ignore the caveats, it’s worth noting again that 2014 was the best year for job growth since 1999, a fact which indicates not only potential good news going forward but also a reminder of just how weak the economy has actually been since recovering from the brief recession that we experienced in the wake of the bursting of the dot-com bubble at the end of the 90s. The so-called Bush recovery wasn’t much of a recovery at all, and the Obama recovery has, if anything been even weaker, at least until this year. 2014 is arguably the beginning of a turnaround in that recovery, as both the jobs reports and GDP growth have seemed to confirm over the balance of the year, but the proof of whether or not this is a sustainable new trend remains to be seen. In the short term, declines in energy prices are likely to have beneficial effects for the economy as a whole, especially in the consumer spending area and for corporate profits in industries that are dependent on heavy use of energy. In the longer term, though, there are signs that the economies of Europe and other parts of the world may be weakening, something that is bound to have an impact in the United States at some point. In any case, it’s been a fairly good year for jobs here in the United States, but the wage numbers indicate that it could be much better, and that we’ve still got a long way to go before we can say that the economy is truly healthy.

FILED UNDER: General
Doug Mataconis
About Doug Mataconis
Doug holds a B.A. in Political Science from Rutgers University and J.D. from George Mason University School of Law. He joined the staff of OTB in May 2010 and contributed a staggering 16,483 posts before his retirement in January 2020.

Comments

  1. gVOR08 says:

    All due, no doubt, to anticipation that Mitch McConnell would become Majority Leader 😉

  2. al-Ameda says:

    Republicans – who would have adopted policies that would still have us in recession – will be soon be telling us how better it would be if their policy prescriptions had been implemented.

  3. Dave Schuler says:

    Well, good. For the wage situation to improve I think we’ll need a tighter labor market.

  4. JohnMcC says:

    The first two actions by the new Repub majorities in Congress are to (1) speed approval of Keystone pipeline in a period of collapsing oil prices and (2) changing the definition of full time employment requiring employers to provide health insurance from 30 hr/wk to 40 hr/wk because jobs-jobs-jobs.

    Great work!

  5. Dave D says:

    @JohnMcC: You forgot personhood bills and adding dynamic scoring to SS, because jobs.

  6. Moosebreath says:

    @al-Ameda:

    “Republicans – who would have adopted policies that would still have us in recession – will be soon be telling us how better it would be if their policy prescriptions had been implemented.”

    On some level, they already have. We have fewer public sector jobs than before the recovery, wage growth has been minimal throughout the recovery, and substantially all of the growth in GDP has been Hoovered (pun intended) by the top 1%. From the Republican POV, what’s not to like?

  7. John Peabody says:

    I blame Bush.

  8. bill says:

    awesome, now can we get all these people off of food stamps for crissakes? sure, food prices are very high (yet rarely spoken about for some reason) but it’s ridiculous to have so many people on the partial dole.

  9. gVOR08 says:

    @bill: Food is a factor in the headline inflation rate, which is talked about all the time. Hard luck it doesn’t say what you want it to say.

  10. al-Ameda says:

    @John Peabody:

    I blame Bush.

    To be fair, Bush bequeathed Obama an economy that was losing jobs at a rate of over 700,000 per month, and a crash that would vaporize approximately 25% of the wealth of American businesses and households – or, $18 trillion.

  11. michael reynolds says:

    These are sad, sad times for Republicans. Jobs are back, the stock market is up, the deficit is dropping, Obamacare is working and ISIS is already “degraded” and on the path to being “destroyed.”

    And all this despite the fact that just about every other country is doing worse. China slowing, Japan prone, Europe perhaps entering yet another recession. Who stands tall? Why, look: it’s the Marxist Muslim Un-American Kenyan.

    Republicans will do all they can to kill prosperity before 2016. They need failure. They need the American people to suffer, and God knows they have a record of imposing suffering and bringing about failure.

    We need to kick these aszholes out of Washington the way we here in California kicked them out of Sacramento. It’s amazing how quickly things turned around here once we essentially eliminated the Republican Party.

    Republicans are job-killers, deficit-raisers, and foreign policy incompetents.

  12. C. Clavin says:

    Just as Republicans have gone mostly silent about Obamacare…they have gone from blaming Obama for the economy to trying to claim credit.
    The party that is for nothing, save opposition, no longer has anything to oppose.

  13. anjin-san says:

    @JohnMcC:

    Don’t forget the GOP move this week to create a phony Social Security crisis so they can cut benefits. They are busy beavers…

  14. michael reynolds says:

    What this country needs now, more than anything, is unions. Don’t tell me “wages are flat” as unemployment is dropping and then fall back on a need for a still tighter job market. That’s baloney.

    Tight labor or too much labor, it has not altered the fact that the top 1% captures more and the remaining 99% take less. Productivity increases did not raise wages. More job creation did not raise wages. The economic elite are not going to voluntarily part with a penny of what they’ve got until forced to do so. There was a tight labor market when Irish and Chinese immigrants were building the railroads and they were still paid slave wages.

    The working man needs to take, not beg.

    Republican economic theories are pure nonsense. There is no trickle down. There is no tide lifting all boats. There is a ruthless elite exploiting a fragmented, dis-united worker base. We need to raise the minimum wage, and we need to bring back the unions. The only way things will really improve for working people in this country is by government imposing higher wages and unions fighting for a bigger share.

  15. grumpy realist says:

    OT, but Doug, could you comment on the Cassandra C case? From her editorial, Cassandra seems a few forks short of a picnic.

    (Eh, let her have what she wants. Stupidity should hurt.)

  16. Mikey says:

    @grumpy realist: She’s said she “doesn’t want poisons and toxins” in her body, despite the fact she’ll die in a few months without chemotherapy and has about an 85% chance of complete recovery with it. (And she seems to forget…Hodgkin’s disease is pretty damn toxic…)

    Yeah, chemo sucks. I know a few people who’ve had it for various sorts of cancer, including my mother (30-year breast cancer survivor, go Mom!). But to fight a few weeks of chemo that has an 85% chance of complete recovery…that’s not just a few forks short of a picnic, that’s the basket and the blanket, too.

  17. michael reynolds says:

    Case in point: Sea-Tac raised minimum wage to $15 and the result? Was it the higher unemployment predicted by Republicans? No. Unemployment in the Sea-Tac zone has dropped a point and a half since the increase.

    Every word out of a Republican’s mouth on the subject of the economy is a lie told for the sole purpose of enriching the few and screwing the many. Every word since Ronald Reagan.

    Anyone in the bottom 90% who votes Republican is a clueless dupe.

  18. gVOR08 says:

    @michael reynolds: Anyone in the bottom 99.99. That will come off as snarky, but my point is that it isn’t the 10% or the 1%, it’s the .01%. That 9.99% are, I suspect, heavily Republican, and they shouldn’t be, Dems also represent their interests much better. And that 9.99% carry disproportionate political clout.

  19. grumpy realist says:

    @Mikey: Well, she’s a teenager, which means “idiot” 99% of the time anyway. Her mother seems to be into woo-woo land “think happy thoughts about the cancer and it will go away” and has unfortunately home-schooled her child, so this isn’t unexpected.

    I’m grumpy enough to say “let the little clueless idiot have what she wants.” At some point I think it’s useless to try to protect people from the consequence of their beliefs. She claims that she understands that refusing chemotherapy essentially means a death sentence for herself. Have her sign off on that and send her home to Momma.

  20. grumpy realist says:

    @Mikey:

    The teen’s mother, Jackie Fortin, of Windsor Locks, said after the arguments Thursday that as a single mom for the last 15 years she wouldn’t allow her daughter to die.

    As if the untreated cancer can be warded off through mind waves….Mom’s also quite a few forks short as well.

  21. Mikey says:

    @grumpy realist:

    Her mother seems to be into woo-woo land

    Yeah, I read a more detailed article and it seems her mother is exerting a lot of influence and is the one pushing against “poisons and toxins.” She wants “alternative” therapies, which never work (just ask Steve Jobs how it went…you’ll need a spirit medium, though). So in that context it seems to me the state was acting properly.

  22. Guarneri says:

    @Dave Schuler:

    And a better mix.

  23. Guarneri says:

    @michael reynolds:

    I guess the electorate didn’t get the memo.

  24. Guarneri says:

    @michael reynolds:

    Gentlemen, our course is clear, our duty sacred. Raise the minimum wage to $25/hr as soon as possible.

  25. C. Clavin says:

    @grumpy realist:
    Maybe I’m just missing your point…but my understanding is the mom wants her to get treatment.

  26. grumpy realist says:

    @C. Clavin: All I’ve read seems to indicate that Mom doesn’t want her kid to get chemotherapy. Otherwise we wouldn’t be in this pickle in the first place. She’s fine with other therapies that won’t work. Gee, thanks, Mom.

    As said, a fruits-and-nuts mom out in LaLa land and a dumb kid parroting what Mom says. Let the little idiot die. I put her in the same category as motorcyclists who insist on their “freedom” to not wear helmets. Fine, just as long as we get to pull the plug on you just as soon as you put yourself in a coma via head injury, and you waive any possibility of disability payments. Oh, and please post a $5000 bond beforehand to pay whoever has to scrape up your spilled brains from the pavement….

  27. michael reynolds says:

    @Guarneri:

    Says the man who has been right about nothing, ever.

    Where’s the job destruction that would be wrought by Obamacare, Oh, Captain of Industry?

    Where’s the job loss in Sea-Tac?

    No, really, why don’t you explain why Obamacare comes into force, and contra absolutely everything you claim to know, job creation goes up? Come, on Biz Genius, ‘splain to us lesser folk how you were right all along. Then explain job growth in areas with raised minimum wages?

    Man up, for once, Drew, and tell us how you are so wrong and yet, somehow, right. Man up or shut up.

  28. humanoid.panda says:

    @Guarneri: How about 18$, what would it had been if it was pinned to inflation from 1968 to 2014? All things considered, 1960s America was not a Stalinist hellscape.

  29. C. Clavin says:

    @grumpy realist:
    Ok…haven’t paid that close attention.

  30. michael reynolds says:

    Noting that once again, Guarneri has nothing to say. Nor has anyone else popped in to explain the disconnect between year after year of Republican predictions that Obamacare would be a job killer, and the fact that the UE rate is now lower than Mitt Romney promised.

  31. michael reynolds says:

    Ronald Reagan cut unemployment in half, from 10.8% at its highest, to 5.4% when he left office.

    Barack Obama has cut unemployment from a high of 10% to 5.6%, and did it despite being forced by Republicans to cut government jobs, and despite the fact that the downturn Mr. Obama inherited was far, far worse than the situation Mr. Reagan faced.

    And Obama did it while giving us Obamacare – which Republicans swore up and down would be a job killer.

    Republicans, as usual, full of it.

  32. Tyrell says:

    Job market improving: here were the job openings in local paper: delivering telephone directories (four weeks), sales associate – vacuum cleaners – door to door, school crossing guard needed – 4 hours per day, sidewalk maintenance (basically scrapes gum off sidewalks and that sort of thing), truck drver, pet store needs groomer – will train, and movie theater position – 10 hours weekly.
    Not exactly the type of work that gets the ambitious self starter flow going.

  33. michael reynolds says:

    @Tyrell:
    Dude, no one uses the paper any more.