U.S. employers seem to have ignored last month's fiscal cliff drama, with December job growth continuing to ramble along on a slow and bumpy road to some still-distant semblance of normal.
The Labor Department said Friday that employers added 155,000 jobs for the month, in line with economists' predictions, a rarity in itself. The unemployment rate for November was revised upward 0.1 percentage point to 7.8 percent, and that is where it stayed in December. That may seem like bad news, but it's not. In this case, it means more people reentered the workforce because of improved job prospects.
Revisions to prior reports added a total of 14,000 jobs to payrolls in November and October, the Labor Department said.
Investors approved, sending the benchmark Standard & Poor's 500 Index to the highest level since December 2007 on Friday.
"Despite the gridlock in Washington and seeming inability to get anything done, the private sector kept on hiring," said James W. Hughes, dean of the Edward J. Bloustein School of Planning at Rutgers University.
Hughes expects the lawmakers' compromise, which eliminated a partial payroll tax holiday and lifted income taxes on the rich, to slightly dampen employment and economic growth in the first half of the year. Also, he and other economists are concerned about a potential repeat of last year's fight in Congress over the need to raise the country's debt ceiling so it can continue to pay its debts. That creates more uncertainty among employers, who may be considering hiring more workers, they say.
The U.S added 1.84 million jobs last year, a little less than in 2011.
In December, restaurants and bars gained 38,000 jobs, suggesting more people are going out to eat and drink.
An increase of 25,000 factory jobs, the most since March, had a lot had to do with hiring in the recovering automobile industry, said Patrick J. O'Keefe, director of economic research at CohnReznick in Roseland.
"Unfortunately for New Jersey, our manufacturing sector has shriveled, even though the nation's is expanding,'' he said. "We are not beneficiaries here because we have a small, highly specialized manufacturing base."
Construction, boosted by property damage in the Northeast from superstorm Sandy, as well as ongoing improvement in the nation's housing market, added 30,000 jobs, the biggest gain in 15 months.
"Demand for housing is relatively solid because of lower real estate values and lower interest rates," said Hasbrouck Heights builder Vinnie Luppino. He began construction in the fall on a six-story, 28-unit multifamily structure on Hudson Terrace in Fort Lee that is generating construction jobs.
However, tight credit at banks remains a headwind for a rebound in homeownership, which is the biggest source of wealth for America's middle class.
Whether Luppino's units will be marketed as condominiums or rentals depends in part on availability of condo loans for would-be buyers. "That's a big question," Luppino said.
All the job gains were in the private sector as government payrolls dropped for the third straight month, the Labor Department said.
"You did see broad-based gains and that was kind of important to see," said John E. Silvia, chief economist at Wells Fargo in California. "There were some people getting scared about the fiscal cliff, but that was not shown all that much in the data," he said.
The rise in hiring was augmented by bigger-than-projected gains in wages and the workweek.
"It does seem those who are working are getting higher wages, and income growth may be higher [this year] than people expected," Silvia said. "This economy has legs and will continue to grow."
O'Keefe's view was more pessimistic: "A mediocre conclusion to an otherwise mediocre year," he said.
Job gains have been more or less steady over the past 34 months but not large enough to kick a very sluggish recovery into a higher gear, he said.
"It's been the economic equivalent of watching paint dry," O'Keefe said.
The silver lining of Sandy, which is expected to take a heavy toll on Jersey Shore tourism this summer, is "it may give construction a boost this winter that we normally would not get," O'Keefe said.
Doug Kuiken, president of Fair Lawn-based lumber and building materials supplier Kuiken Brothers Co., said so far, Sandy has only slowed his business.
"It postponed some of the projects that might have gotten started," he said. "There will be rebuilding in the Shore area, but that won't take place in earnest until the spring."
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