The U.S. economy added 223,000 jobs in December and the unemployment rate plunged to 3.5 percent, the Labor Department said Friday.
Economists had expected the economy to add 200,000 jobs and the unemployment rate to remain unchanged at 3.7 percent. The range of forecasts by economists surveyed by Econoday was between a gain on payrolls of 150,000 to 230,000. On unemployment, the range of forecasts was 3.7 percent to 3.8 percent.
The Labor Department’s Job Opening and Labor Turnover Survey, knowns as Jolts, showed that there were 10.5 million job openings at the end of November and October, around 1.7 vacancies for every unemployed person. Federal Reserve officials frequently cite the vacancy ratio as evidence that the labor market is so tight that it risks fueling inflation.
Fed officials have said that softening demand for labor is the key to bringing inflation down to their two percent target. They fear that high demand for labor is fueling wage increases that, in turn, drive prices of goods and services up.
Despite the strong gains in employment, average hourly earnings rose by less than expected. The Department of Labor said average hourly earnings rose 9 cents, or 0.3 percent, to $32.82. Over the past 12 months, average hourly earnings have increased by 4.6 percent. Economists had expected a 0.4 percent gain for the month and a five percent gain compared with a year ago. The prior month’s wage gain was revised down to 0.4 percent month-to-month from 0.6 percent and 4.8 percent annually from 5.1 percent.
