The US economy continued to show surprising resiliency as the Bureau of Labor Statistics reported on Friday that the economy added 216,000 new jobs in December.
The unemployment rate remained at a steady 3.7 per cent amid increased consumer spending during the holiday season and as inflation climbs at a much slower rate than in 2022.
The report is welcome news for President Joe Biden as he plans to make the economy a major selling point in his 2024 re-election campaign against former president Donald Trump.
Government jobs grew by 52,000, mostly through increases in local government jobs, while the healthcare sector added 38,000 jobs in December. Social assistance added 21,000 jobs while construction employment added 7,000 jobs. But transportation and warehousing shed 23,000 jobs in December.
The jobs report surpassed the expectations that markets had. The ADP National Employment report projected that the US economy added only 164,000 jobs.
At the same time, the October jobs report was revised down from 150,000 jobs to 105,000 jobs while the bureau revised its November jobs numbers down from 199,000 jobs to 173,000.
The report also showed that hourly earnings rose by 0.4 per cent in the past month and by 4.1 per cent in the past year.
The positive jobs numbers come as consumer spending increased ahead of the holiday season, according to a report from the Bureau of Economic Analysis from November.
Federal Reserve Chairman Jerome Powell announced in December that the central bank would not raise interest rates, nor would it cut them just yet. Markets have hoped that the Federal Reserve would cut interest rates in the new year.
“Job growth has now averaged 165K over the last 3 months, just in line with the 2019 average of 164K,” Olu Sonola, head of US regional economics for Fitch, said in a statement. “However, the Fed will likely be paying a lot more attention to the decline in labor participation and the uptick in wage growth. This report does not scream rate cuts, it points more in the direction of curtailing recent market expectations of rate cuts starting as early as March.”
The Federal Reserve has sought to ensure that a hot labour market does not contribute to increased inflation. In December, the bureau reported that inflation rose by 0.1 per cent in November and by 3.1 per cent in the past 12 months. The next Consumer Price Index report that shows inflation for December will be released in on Thursday.
