Job growth slowed at the end of last year while the unemployment rate ticked higher — signs that the tight labor market is resulting in diminished hiring even as it is pushing wages higher.
The U.S. economy added 156,000 net new jobs last month, down from an upwardly revised 204,000 created in November, the Labor Department said Friday.
The jobless rate closed out the year at 4.7 percent, up from 4.6 percent, but still the lowest for a December since 2006.
Average wages for all private-sector workers rose at the fastest annual pace since 2009, increasing 2.9 percent, led by sharp gains in the high-end information sector and the lower-paying hotel and restaurant business.
“With wage growth climbing again, the modest drop-off in employment growth won’t stop the Fed from tightening monetary policy again this year,” said Paul Ashworth of Capital Economics, referring to the Federal Reserve’s plans for increasing interest rates in the coming months.
The report suggests that the nation’s job market remains solid, although a slowdown in hiring is expected after seven straight years of job growth. The economy added an average 229,000 jobs a month in 2015 and 251,000 in 2014.
President-elect Donald Trump has pledged to boost the nation’s modest pace of economic growth with changes in tax policy, business regulations and infrastructure spending. But he faces an economy that is at or close to full employment in which it will be increasingly hard to keep up a high rate of job growth.
“Since the election, financial markets and surveys of business and consumer confidence have showed growing optimism about short-term growth prospects of the U.S. economy,” said Gad Levanon, chief North American economist for the Conference Board, an employer-sponsored research group. “But it’s too early to see this optimism in December’s job growth number, which reflects a continuation of a moderate employment growth trend.”
Job growth last month was broad-based. It was led by strong hiring at health care firms, which added 43,000 to their payrolls. With Trump and the new Republican-controlled Congress pledging to repeal Obamacare, future hiring prospects are uncertain.
Restaurants and drinking establishments added a solid batch of new jobs as well, as did manufacturing, reversing four months of job cuts.
Hiring by retailers was relatively soft, and announcements this week by Macy’s and some other major department stores portend a weaker outlook ahead for this sector.