WASHINGTON -- December marked another lukewarm month of hiring, the government said Friday in an employment report that suggested the economy had weathered “fiscal cliff” uncertainty but probably will muddle along for some time with subpar growth.
The unemployment rate held steady at 7.8 percent in December as employers added 155,000 jobs, the Labor Department said, bringing the full-year total to 1.835 million jobs in 2012.
Private-sector employers added 168,000 posts last month, but the overall number was dragged down by 13,000 government jobs lost. The 155,000 jobs reported fell in the range of the monthly average for all for 2012, which happened also to be the monthly average for 2011: 153,000. It means that hiring is on a steady, albeit not robust, trajectory.
“We sort of went through the fiscal cliff debate and firms continued to hire. And there is more underlying strength in the economy that really was not going to be scared away by all this fiscal cliff debate,” said John Silvia, the chief economist for Wells Fargo Securities in Charlotte, N.C., who thinks the economy is growing about the best it can in this environment. “It’s doing OK. It’s not a boom, but it’s doing OK.”
While hiring has held steady for two years, Silvia thinks it would be even better if not for a skills gap, a structural issue that leaves too few skilled workers for the jobs that need to be filled.
“It’s hard to put these (unemployed) people to work in a lot of these areas that require computer literacy,” he said. “It’s a very different type of manufacturing worker than 30 or 40 years ago.”
This helps explain why the number of long-term jobless, those who’ve been out of work for half a year or more, held steady at 4.8 million in December and accounted for 39 percent of all the unemployed
Other economists were impressed with the economy’s resilience, given the fiscal cliff uncertainty and the shock to the Northeast from Hurricane Sandy.
“There were gains across most industries, with 63 percent of industries adding jobs. Goods-producing employment was strong. Construction employment rose by 30,000 … a sign of recovery in the housing sector and rebuilding efforts from Hurricane Sandy,” Neil Dutta, the head of economics for forecaster Renaissance Macro, said in a note to investors.
Employment was revised upward by 14,000 jobs combined for October and November, while hourly earnings and hours worked also have ticked up, he said.
Just a day earlier, financial markets were spooked when the minutes of the last Federal Reserve meeting were made public and seemed to signal that support for the economy might be lifted by the end of 2013.
Friday’s jobs report, not too hot or too cold, put that issue to rest. Federal Reserve Chairman Ben Bernanke announced in December that an unemployment rate holding steady around 6.5 percent would be his marker for when to begin withdrawing the massive support that the economy is being given.
There was nothing in Friday’s report that pointed to a sharp drop in the jobless rate. The economy generally needs to create 150,000 jobs each month just to keep pace with new entrants into the workforce.
“For me this report indicates an economy that is stuck on a shallow growth trajectory,” Steven Ricchiuto, the chief economist for Mizuho Securities USA, said in a research note.
For the White House, the continued growth in employment is a sign of a recovery moving forward.
“The economy has now added private-sector jobs for 34 straight months, and a total of 5.8 million jobs have been added over that period,” Alan Krueger, the head of the White House Council of Economic Advisers, said of the jobs numbers in his White House blog.
For others, there’s still a long road ahead.
“The jobs deficit — the number of jobs lost since the recession officially began five years ago plus the number of jobs we should have added just to keep up with the normal growth in the potential labor force — remains nearly 9 million. At December’s growth rate the labor market will not fill in that gap until the end of 2021,” Heidi Shierholz, an economist with the liberal Economic Policy Institute, said in a statement Friday.
Friday’s jobs report could have been worse. Washington’s dysfunction over the fiscal cliff, which was only partly averted by a New Year’s Eve deal, has weighed on hiring. And hiring probably was restrained as the Northeast struggles to recover from Hurricane Sandy.