Beating expectations, employers add 312,000 jobs in December; unemployment rate increases slightly

In what seemed to us to be a month with unusual economic uncertainty, U.S. employers continued strong hiring. The Associated Press reports,

U.S. employers dramatically stepped up their hiring in December, adding 312,000 jobs in an encouraging display of strength for an economy in the midst of a trade war, slowing global growth and a partial shutdown of the federal government.

The Labor Department said Friday that the unemployment rate rose slightly to 3.9 percent, but that reflected a surge in jobseekers— a positive for growth.

And pay continues to rise.

Average hourly pay improved 3.2 percent from a year ago, up from average wage growth of 2.7 percent at the end of 2017.

AP reporter Josh Boak points out employers continue to face worker shortages.

Businesses are still searching for more workers…

Despite the increase in the unemployment rate, the influx of people searching for work coupled with the job gains is an indication that the rate should decline in the coming months. Economists estimate that it requires roughly 100,000 job gains each month to satisfy population growth and keep the unemployment rate at its current level.

Hiring has easily eclipsed that pace.

This extends the pattern we wrote about last month.

Economist Bill McBride comments on the employment report at Calculated Risk (click through for some good, explanatory graphs).

The headline jobs number at 312 thousand for December was well above consensus expectations of 180 thousand, and the previous two months were revised up 58 thousand, combined. However, the unemployment rate increased to 3.9%. This was a strong report.

We’ll consider it some good news, at least temporarily tempering a spate of uncertainty and concern.