After a week of gloomy news about China, the U.S. economy came shining through on Friday, offering a surprisingly bright jobs outlook for 2016.
The U.S. economy is on track for “higher productivity, good job gains — and the supply of potential workers expanding fast enough” to allow companies to grow in 2016, IHS Global Insight said in its analysis. “Optimism is a good way to cap off a solid year and start a new one.”
The jobs report was not enough to prop up the stock market, which had another bad day because of worries about China and collapsing oil prices. The Dow Jones industrial average fell about 1 percent, losing 167.65, to 16,346.45. Other stock measures also lost about 1 percent.
But while investors fret about hits to corporate profits from the Chinese slump, U.S. workers have reason to celebrate. The Labor Department said employers added 292,000 jobs in December. That was far more than the 200,000 jobs analysts had been predicting.
“The U.S. economy is heading into 2016 with domestic and international forces pulling in different directions,” according to the written assessment of HSBC Securities. As China was slowing and many developing countries lagging, the United States was seeing demand for goods and services “growing at a good pace for the past year,” HSBC said.
And that bodes well for job seekers in the new year.
Friday’s jobs report “signals a U.S. economy with remarkably strong momentum that’s likely to continue into 2016,” says Andrew Chamberlain, chief economist for Glassdoor Economic Research.
Not only did jobs increase by 2.7 million in 2015, but hours worked and overtime paid showed enough momentum to boost hopes for decent raises in 2016. “Workers saw average hourly wages grow by 2.5 percent from one year ago—still somewhat below average, but part of a broader rising trend toward wage acceleration as the economy nudges toward full employment,” Chamberlain said.
In December 2014, the unemployment rate was 5.4 percent. Last month, it held steady at 5 percent. The jobless rate was unchanged from November despite the hiring surge because 466,000 workers returned to the labor force. That caused the participation rate to tick up a tenth of a point to 62.6 percent.
And the new jobs were spread across many industries. The biggest gains came in professional and business services, up by 73,000 jobs, and health care, up 52,600 jobs. Another strong category: construction, which added 45,000 jobs.
But evidence of China’s troubles showed up in the 8,000 jobs lost in mining and logging. For years, U.S. producers of commodities have been counting on China’s explosive expansion to absorb raw materials, such as oil, iron ore, copper and timber. But as China’s demand cools, so do sales of bulk materials.
And those commodities may be hurt even more in 2016, thanks to the rising value of the U.S. dollar. As the currency gains strength, it makes it harder to sell U.S. goods overseas. “Headwinds from a strong dollar, sluggish global growth and weak oil prices will continue to weigh on mining and manufacturing employment,” Gregory Daco, economist with Oxford Economics, said in his analysis.
But on the other hand, cheap oil will help U.S. consumers save money and a strong dollar will allow them to buy imports at low prices — keeping inflation at bay. All of that could help families pay down debt, buy new cars or make other purchases in 2016.
Or as Michael Strain, a scholar at the American Enterprise Institute, said in his report on the jobs data: “All in all, a great end to the year.”