A Strong Employment Report
A strong December payroll gain plus upward revisions to November and October suggest the economy is entering 2016 with good momentum.
Three consecutive months of job gains above 200,000 should reassure investors that the economy can weather recent market volatility.
The key disappointment was flat hourly wages for December, but continued strong jobs gains should help boost wage growth down the road.
Overall, the economic picture supports our expectation of continued Fed tightenings during 2016 – but at a very slow pace.
The December Employment report showed broad strength, with the economy adding 292,000 jobs for the month; 275,000 from the private sector. Prior months were revised higher by a combined 50,000 in October and November. The three-month average is a robust 284,000.
Increases in payrolls were broad-based, led by private services, particularly Education & Health Care, Leisure & Hospitality, Professional & Business Services, and Transportation.
Construction industries added 45,000 jobs, the fourth strong month in a row.
Wages were unchanged for the month but up at a 2.5 percent rate over the past 12 months.
The length of the average workweek was unchanged at 34.5 hours.
When hours are combined with payroll gains and wages, the index of aggregate hourly earnings, a proxy for take-home pay, rose 0.2 percent for December and 4.5 percent over the past 12 months.
The unemployment rate held at 5.0 percent while the participation rate increased to 62.6 percent.
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