The U.S. economy added 50,000 jobs in December, a moderate improvement after hiring cratered in October and rebounded only slightly in November.
After posting an average of only 48,000 jobs per month, after revisions, through the first 11 months of the year, the employment numbers could be a sign that the worst has passed.
Combined with plummeting government employment and a temporary delay of official data in the midst of the longest U.S. government shutdown in history, the overall labor market picture has for months remained foggy with conflicting signals.
The unemployment rate, which has trended higher for months, fell to 4.4%.
Wall Street expected a gain of 73,000 jobs last month and a slight drop in the unemployment rate to 4.5%, according to economists surveyed by Dow Jones.
Job gains in December were largely driven by food services, health care and social assistance, according to the Labor Department, with losses concentrated in retail trade and manufacturing..
Meanwhile, wage data showed that average hourly earnings clocked in at $37.02 in December, up 3.8% from a year earlier. Wage data is closely watched as a gauge of labor market tightness and a key signal for inflation pressures as the Federal Reserve continues to weigh future interest rate cuts.
JPMorgan’s chief U.S. economist Mike Feroli described the chance of a cut in January as a “close call” in a note last week. “If the job market does start to re-tighten, the Fed would likely leave policy on hold for a sustained period.”
In the days leading up to Friday’s release, the direction of the labor market wasn’t entirely clear.
Executive search firm Challenger, Gray, and Christmas said Thursday there were half as many layoff announcements in December as there were in November, and were down 8% from a year earlier.
Meanwhile, the number of Americans filing for unemployment benefits came in lower than expected for the week ending January 3, a positive sign as economists watch for further evidence that the labor market is cooling but not cracking.