The jobs market closed out 2017 on a weaker-than-anticipated note, but still one that was arguably positive.
The unemployment rate was unchanged at 4.1% in December, holding steady for the third consecutive month.
Job creation slowed to 148,000, coming in well below the revised November tally of 252,000 and short of expectations for about 190,000 for the month. Revisions to the preceding two months trimmed another 9,000 from recent job creation.
For the year, the economy created over 2 million jobs, down from about 2.25 million in 2016, but still a solid figure consistent with an economy that grew at a respectable clip.
While job gains were widespread across a number of sectors, gains in construction and manufacturing were strong. The service sector was a mixed bag, particularly given the loss of over 20,000 retail jobs as internet commerce continues to transform the retail economy.
The tightening of labor market conditions is making it more difficult for employers to find qualified workers, and that will increasingly impinge on payroll growth and should also continue to put upward pressure on wages.
Average hourly earnings rose by 0.3% in December – better than in the prior month – but still in line with the prevailing 0.2%/month trend. For the year, average hourly earnings rose by 2.5% -- off the lows of recent years, but still a lackluster pace of increase.
While the report closes out 2017 with less of a bang than economists had hoped, the bottom line is that the economy remains on a steady growth path, supported by increasingly tight labor market conditions and inflation that appears poised to edge higher, but remains quite low. Certainly, there’s room for stronger growth, and the economy appears well positioned to accelerate in the coming year, lifted by moderate fiscal stimulus, a Federal Reserve that appears content to tighten gradually, and a global economy that is as close to firing on all cylinders as it has been in some time.
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