US jobs growth slows but economy remains on track

US employment increased less than expected in December but a rebound in wages pointed to sustained labour market momentum that sets up the country’s economy for stronger growth and further interest rate increases from the Federal Reserve this year.

Non-farm payrolls rose by 156,000 jobs last month, the US Labor Department said yesterday.

The gains, however, are more than sufficient to absorb new entrants into the workforce. Fed chair Janet Yellen has said the economy needs to create just under 100,000 jobs a month to keep up with growth in the work-age population.

Employers hired 19,000 more workers than previously reported in October and November.

The US economy created 2.16m jobs in 2016. Average hourly earnings increased 10 cents, or 0.4%, in December after slipping 0.1% in November. That pushed the year-on-year increase in earnings to 2.9%, largest gain since June 2009.

While the US unemployment rate ticked up to 4.7% from a nine-year low of 4.6% in November that was because more people entered the workforce, a sign of confidence in the labour market.

The employment report added to data — ranging from housing to manufacturing and car sales — in suggesting US president-elect Donald Trump is inheriting a strong economy from the Obama administration.

The labour market momentum is likely to be sustained amid rising business and consumer confidence.

Mr Trump has pledged to increase spending on the country’s aging infrastructure, cut taxes and relax regulations. These measures are expected to boost growth this year.

Reuters