Residents have been warned that the winds may cause 'microbursts, reduced horizontal visibility'
Payrolls outside the farming sector grew 155,000 last month, the Labour Department said on Friday. That was in line with analysts’ expectations and slightly below the revised gain of 161,000 reported for November.
The report reinforces expectations of two per cent economic growth this year, unlikely to quickly bring down the unemployment rate or make the US Federal Reserve rethink its easy-money policies anytime soon despite growing unease by some policymakers over a bond-buying programme.
“The US economy is just muddling through,” said Tom di Galoma, managing director at Navigate Advisors in Stamford, Connecticut.
The jobless rate held steady at 7.8 per cent in December, down nearly a percentage point from a year earlier but still well above the average rate over the last 60 years of about 6 per cent.
The Labour Department raised its estimate for the unemployment rate in November by a tenth of a point to 7.8 per cent, citing a slight change in the labor market’s seasonal swings. Most economists expect the US economy will be held back by tax hikes this year as well as by weak spending by households and businesses, which are still trying to reduce their debt burdens.
Friday’s data nonetheless gave signals of some momentum in the labor market’s recovery from the 2007-09 recession.
Gains in employment were distributed broadly throughout the economy, from manufacturing and construction to health care.
Also, many economists had expected December’s payroll gains to be padded by one-time factors like the recovery from a mammoth storm that hit the East Coast in late October.
The government had said last month the storm had no substantial impact on the November data, and many economists expected the government on Friday to recant by revising downward its estimate for payroll gains in November. Instead, the government revised November payrolls upward by 15,000. Average hourly earnings rose 0.3 per cent last month, slightly more than analysts had expected, while the length of the average workweek was unchanged.
“This shows the economy is chugging along, with payroll gains at about the average it has been over the past year,” Tom Porcelli, an economist at RBC Capital Markets in New York.
Analysts appeared divided over whether the number points to the Fed scaling back its plans to buy bonds, perhaps as soon as the second half of this year.
Porcelli said December’s unspectacular payroll gains should reinforce expectations the Fed will continue with the programme. However, Craig Dismuke, a strategist at Vining Sparks in Memphis, Tennessee, said the current pace of job creation will raise pressure on the Fed to stop bond purchases after the middle of the year.
The Fed has kept interest rates near zero since 2008, and in September promised open-ended bond purchases to support lending further. On Thursday, however, minutes from the Fed’s December policy review pointed to rising concerns over how the asset purchases will affect financial markets.
US S&P stock index futures added to gains after the data, while US Treasuries prices erased most of their losses.
Despite the signs of some momentum in hiring, a wave of government spending cuts due to begin around March loom over the economy. Many economic forecasts assume the cuts — which would hit the military, education and other areas — will ultimately be pushed into next year as part of a deal sought by lawmakers to reduce gradually the government’s debt burden.
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