By Eric Morath
WASHINGTON -- Barack Obama is handing over to President-elect Donald Trump an economy on a steady but unspectacular path and exiting his role as the economy's steward with a mixed labor-market performance.
Nonfarm payrolls rose by a seasonally adjusted 156,000 in December from the prior month, a slowdown from November's more robust gain, the Labor Department said Friday. For all of 2016, the economy added just under 2.2 million jobs, the smallest gain for a calendar year since 2011.
The unemployment rate ticked up to 4.7% last month, but remains historically low. Wages showed new signs of firming, rising at the best annual rate since 2009, a sign that more than seven years into a slow-growing expansion labor-market conditions are finally tightening enough to reap payoffs for workers.
The final full month of President Obama's term was the 75th straight month U.S. employers added jobs. It extended the longest such stretch on record back to 1939. The unemployment rate was well down from a peak of 10% early in his presidency.
Those achievements were marred by trends including a long run of weak wage gains, the lowest share of adults in the labor force in four decades, and an elevated number of Americans frustrated because they are stuck in part-time jobs but want full-time work.
The combination of emerging wage gains and steady hiring likely keeps the Federal Reserve on a path toward raising short-term interest rates cautiously and gradually in the months ahead.
Mr. Trump will inherit a starkly different economy from the one Mr. Obama saw as he took office eight years ago. The Dow Jones Industrial Average sat below 9000 at the end of 2008, having fallen by about 33% over the past year. The unemployment rate was 7.8% in January 2009, and rising, and the economy shed 791,000 jobs that month alone.
Last year, the Dow edged to near 20000, the unemployment rate was the lowest to end a year in a decade, and 180,000 jobs were added, on average, each month of 2016.
"We've pretty much had a nearly complete recovery from the Great Recession," said Harry Holzer, an economist at Georgetown University, who worked in the Labor Department during the Bill Clinton administration. "It's taken longer than we would have liked...and wage growth has remained an outstanding issue where we haven't made enough progress."
An unemployment rate holding below 5% since last spring does indicate there is far less slack in the labor market than a few years ago. That could finally be putting upward pressure on wages. Last month, average hourly earnings for private-sector workers advanced 10 cents from November, or 0.39%, to $26.00. From a year earlier, wages rose 2.9% in December, the best annual gain in more than seven years.
Wage gains firmed last year, but remain weak by historical standards. Wages for nonsupervisory workers, for which there is a longer series of data, since 2009 have grown at the slowest rate of any expansion since at least the mid-1960s. But prices have risen fairly slowly during the current expansion, meaning workers are losing less of what they bring home to inflation.
The current expansion has featured steady employment gains, but only modest economic growth. As a result, productivity improvements have been weak, a concern for many economists.
"The layoff rate is low, and job openings are up over the past couple of years, which is another sign of a healthy job market," Federal Reserve Chairwoman Janet Yellen said in a speech last month. "Challenges do remain. The economy is growing more slowly than in past recoveries, and productivity growth, which is a major influence on wages, has been disappointing."
A broad measure of unemployment and underemployment, which includes those who have stopped looking and those in part-time jobs who want full-time positions, was 9.2% in December, the lowest since April 2008. The rate averaged 8.5% in the three years before the recession.
The labor-force participation rate, those with jobs or actively seeking work, moved up to 62.7% in December from 62.6% the prior month, still hovering near a four-decade low. The smaller share of adults working partly reflects an aging U.S. population. But it could also show little wage growth and an expansion of Medicaid and other safety net programs encourage some Americans to stay out of the workforce.
Last month, payrolls grew in health care, manufacturing and the leisure and hospitality sectors, but employment fell slightly in construction and mining.
The Labor Department said the average workweek in December was unchanged at 34.3 hours.
Write to Eric Morath at firstname.lastname@example.org
(END) Dow Jones Newswires
January 06, 2017 10:56 ET (15:56 GMT)
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