Thread: Streak of solid hiring bolsters confidence about 2015

Streak of solid hiring bolsters confidence about 2015

By CHRISTOPHER S. RUGABER, AP Economics Writer | January 9, 2015 | Updated: January 9, 2015 3:32pm

• Photo By Ted S. Warren/AP
  FILE - In this Oct. 23, 2014 file photo, Joe Wilhelm, left, a recruiter with payment processing company First Data Corp., shakes hands with U.S. Army Spc. Vincent Knowles, at a job fair that was part of a "transition summit" intended to provide employment and educational information to soldiers who may exit military service in the next year, at Joint Base Lewis-McChord, Wash. The Labor Department releases employment data for December 2014 on Friday, Jan. 9, 2015.

WASHINGTON (AP) — U.S. employers are showing more confidence than they have since the Great Recession began and will probably propel the economy in 2015 to its fastest growth in a decade.

December's job gains capped a stellar year for hiring that saw nearly 3 million jobs created, the most since 1999. The acceleration put further distance between the steadily strengthening American economy and struggling nations overseas.

"Last year was a truly breakout year for the labor market," said James Marple, an economist at TD Securities. "Businesses are increasingly looking to hire."

Friday's report from the Labor Department showed that employers added 252,000 jobs in December and 50,000 more in October and November combined than the government had previously estimated.

The unemployment rate dropped to 5.6 percent from 5.8 percent in November. The rate is now at its lowest point since 2008.

The government's report did point to some weaknesses, notably in Americans' paychecks, which have barely kept ahead of inflation during the 5½-year recovery. In December, average hourly pay actually fell.

"The continued listless performance of hourly earnings is an ongoing frustration," said Richard Moody, an economist at Regions Financial.

And one reason the unemployment rate fell last month had nothing to do with more hiring: Many of the jobless gave up looking for work and so were no longer counted as unemployed.

Still, while December's hiring did not match November's huge 353,000 gain, job growth in the final three months of 2014 averaged a robust 289,000. That was up sharply from the 239,000 average for the third quarter of 2014.

The unemployment rate is now near the 5.2 percent to 5.5 percent range that the Federal Reserve considers consistent with a healthy economy — one reason the Fed has been expected to raise interest rates from record lows by midyear.

Yet for now, the plummeting oil prices and weak pay growth are helping keep inflation even lower than the Fed's 2 percent target rate. Many economists think inflation may fail to reach even 1 percent this year. A result is that the Fed could feel pressure to avoid raising rates anytime soon.

"There is still room for stimulus without having to worry about inflation taking off," said Michael Strain, an economist at the American Enterprise Institute.

Most economists forecast that the U.S. economy will expand more than 3 percent this year. If it does, 2015 would mark the first time in a decade that growth has reached that level for a calendar year.
In December, hiring was widespread across most industries.

Construction firms added 48,000 jobs, the most since January. Manufacturers gained 17,000, restaurants and bars 44,000.
One industry where hiring slowed in December was retailing, which cut back after having staffed up in November for the holiday shopping season.

Overall, American businesses have been largely shrugging off economic weakness overseas and continuing to hire at solid rates. The U.S. economy's steady improvement is especially striking compared with the weakness in much of the world.

Europe is barely growing, and its unemployment rate is nearly double the U.S. level. Japan, the world's third-largest economy, is in recession. Russia's economy is cratering as oil prices plummet.

China is straining to manage a slowdown. Brazil and others in Latin America are struggling.

Fears about significantly cheaper oil spooked investors earlier this week before financial markets recovered. But most economists remain optimistic that lower energy prices will benefit U.S. consumers and many businesses.

Though 2014 job growth was the best since 1999, other measures were less encouraging. Average hourly pay rose just 1.7 percent last year, less than half the 3.5 percent gain in 1999, a pace more typical of a strong economy.

Hourly wages fell to $24.57 in December from $24.62 in November.

Hourly pay over the past two months has now risen just a penny.

As hiring ramps up and the unemployment rate falls, those pressures should, at least in theory, compel employers to raise pay to attract workers. But that trend has yet to emerge.

Consider CMIT Solutions, a fast-growing IT services company based in Austin, Texas, with 800 employees in 147 U.S. cities.

CEO Jeff Connally says his firm plans to add 80 to 120 jobs this year. But in most cities, he doesn't expect to have to raise pay to attract employees.

Despite weak pay growth, strong hiring is still providing much-needed relief to the unemployed. During 2014, the unemployment rate fell 1.1 percentage points, similar to 2013's decline of 1.2 points.

But there was a crucial difference: Last year's drop occurred even though the number of Americans either working or looking for work rose by more than 1 million.

That's a welcome change from 2013, when the unemployment rate's decline was fueled by an exodus of about 500,000 workers. Those people gave up on their job hunts and were no longer counted as unemployed.

The job gains are healing some of the deep scars left by the recession. The number of people who have been unemployed for more than six months fell 28 percent last year. And the number working part time who would prefer full-time work dropped 13 percent.

Spending at retailers and restaurants rose in November by the most in eight months, an early sign that Americans are spending some of the savings they are enjoying from gas-pump prices.

http://www.chron.com/business/energy/article/Unemployment-rate-falls-to-5-6-pct-as-US-gains-6004108.php

Job Growth Looks Great; Wage Growth, Less So

JAN. 9, 2015
Neil Irwin

• The last few weeks have been a time of, dare we say it, buoyant optimism about the United States economy. The long winter slumber may be over, or so it has seemed after news of a 5 percent G.D.P. third-quarter growth rate and a November jobs report showing the strongest gains in years.

The latest jobs numbers, released Friday, show that this basic story of a strengthening economy remains very much intact. The Labor Department reported that employers added 252,000 net positions in December, and revised the two earlier months up by an additonal 50,000. For good measure, the unemployment rate fell a couple of ticks, to 5.6 percent from 5.8 percent.

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This is all excellent news for the people holding one of the 2.95 million jobs that did not exist at the beginning of 2014 (the strongest year of job growth since 1999). And the numbers do nothing to throw cold water on the idea that the recovery has shifted into a higher gear in recent months. But forgive us for a moment of less than sunny optimism on this front.

Photo

Low-wage contract workers at the U.S. Capitol joined other federal contract employees demonstrating in November to call for higher wages.CreditWin Mcnamee/Getty Images

The big disappointment was on wages. In the November numbers, one of the brightest signs was an 0.4 percent rise in average hourly earnings, which was a hint that maybe, just maybe, a tighter job market was leading employers to raise wages after years of resisting.

It turned out to be a false signal. In Friday’s revisions, November wages rose only 0.2 percent. And even worse, in December they fell 0.2 percent.

There Is Still No Upward Trend in Wage Gains

Despite a falling unemployment rate and strong job growth, average hourly wages are rising at about the same low rate they have for years.

Year-over-year percent change in average hourly earnings of all U.S. employees

%

+3

+2

+1

+0

+1.7%

2008

2009

2010

2011

2012

2013

2014

Source: Bureau of Labor Statistics

Over the last year, the average hourly wage in America has risen 40 cents, from $24.17 to $24.57 an hour. That is a mere 1.65 percent, in the same ballpark as many inflation readings and not a meaningful rise in real wages.

The sharp decline in oil and gasoline prices in the last few months means that inflation is falling and may soon be negative, so that will increase the apparent “real” wage gains Americans are experiencing. But if hourly earnings were to tick upward at the same time prices fell, it would be a rare opportunity for a truly robust spurt of real wage growth — 4 or 5 percent, for example — that would translate into significantly better living conditions.

INTERACTIVE MAP

Where Men Aren’t Working

Across the country, 16 percent of prime-age men are not working. Examine non-employment rates for every Census tract.

OPEN INTERACTIVE MAP
The latest wage numbers cast doubt that that will happen, and instead point to employers that continue to muddle along with wage increases in the same 1.5 to 2 percent range we’ve seen for years. That of course could change as 2015 progresses, and the December number could well be revised, just as the November number was.

And the lack of evidence of upward pressure on wages will give the Federal Reserve more confidence that they can be patient in considering interest rate increases, but it’s small solace.

One mild curiosity in the report is that the size of the labor force actually fell, with 273,000 people no longer either holding a job or looking for one. That may be a statistical aberration, but even over a longer period of time the steep drop in the labor force since 2008 has not reversed itself. It’s partly demographic, with more baby boomers nearing retirement age. But the wage numbers also suggest another reason: When employers are so reluctant to raise pay, it shouldn’t be shocking that more Americans choose to sit at home and remain out of the labor force.

For now, though, it appears that employers are able to add jobs in mass numbers without offering meaningful wage increases, which isn’t the New Year’s message American workers are looking to hear.

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http://www.nytimes.com/2015/01/10/up...h-less-so.html

http://www.alipac.us/f19/u-s-wages-s...-years-316712/