Employers added fewer jobs than expected in December but the economic recovery passed a major milestone as the average hourly wages of U.S. workers showed the biggest annual gain since June 2009.
The Labor Department reported that nonfarm payrolls grew by 156,000 jobs last month. Economists had forecast payrolls rising by 178,000 jobs.
But Americans earned an average of $26 an hour last month, up 0.4% on November and 2.9% on a year ago. Earnings had slipped 0.1% in November.
Economists said the wage data suggest the recovery is finally translating into gains for workers.
“The big surprise, and what we found really reassuring, is the bump up in hourly earnings,” Beth Ann Bovino, chief U.S. economist at Standard & Poor’s, told the Washington Post. “We’re starting to see signs that people are going to get more money in their paychecks.”
December marked the 75th straight month of job growth — the most extended streak the country has seen since 1939. But as The New York Times reports, the paucity of gains in take-home pay had “stoked anxiety and frustration for many [Americans], a factor in the wave of discontent that President-elect Donald J. Trump rode to victory in November.”
Many economists expect the trend to gain momentum this year, with wages rising wages up to 3.5%, as a tighter labor market forces employers to pay more to hire and retain workers. “This is a turning point for the overall economy,” said Diane Swonk, an independent economist in Chicago.
The unemployment rate edged up to 4.7% from a nine-year low of 4.6% in November but it has still remained below 4.8%, the Fed’s estimate of the natural rate of unemployment, for two straight months.
“The employment report added to data ranging from housing to manufacturing and auto sales in suggesting that President-elect Donald Trump is inheriting a strong economy from the Obama administration,” Reuters said.
A total of 11.3 million jobs were created during Barack Obama’s term in office. “The report … cements the president’s legacy of helping bring the country out of the Great Recession,” said Robert Murphy, an economics professor at Boston College.