WASHINGTON (1/12/15)--The job market continued to strengthen in December, as payroll employment climbed by 252,000 for the month, while the unemployment rate fell 0.2% to 5.6%, according to the Bureau of Labor Statistics (Economy.com Jan. 9).
Including December's positive performance, job adds averaged 289,000 per month in the fourth quarter. Overall in 2014, the economy created 2.95 million jobs, the most since 1999.
"Although job gains did not match the large November increase, they were strong and indicative of momentum in the labor market that is expected to continue in 2015," said Sophia Koropeckyj, Moody's analyst (Economy.com). "The breadth of job gains is also an indication of a strengthening labor market."
Despite the expansion in payroll employment, however, average hourly earnings fell in December by 0.2% for all workers, and 0.3% for production workers. Meanwhile, the average workweek climbed to 33.9 hours.
Christopher Sullivan, chief investment officer for United Nations FCU, Long Island City, N.Y., with $4.4 billion in assets, told The Wall Street Journal that weak wage growth could affect the decision by the Federal Reserve on when to normalize monetary policy.
"There is a lack of wage inflation, showing there is still slack in the labor market," Sullivan said. "If the trend continues, the Fed is not going to raise rates until very late in 2015 if they raise rates at all."
Further, tempering the good news of the still-dropping unemployment rate, the labor force also retracted in December by 273,000 individuals, which means the labor force participation rate deteriorated, declining to 6.27% for the month.
"Retirements explain some of the decline, but participation fell for nearly every age group," Koropeckyj said.