WASHINGTON – The U.S. economy is motoring ahead despite slowing global growth that caused upheavals in financial markets around the world this week.
Employers added a robust 292,000 jobs last month, and the unemployment rate stayed low at 5 percent, the Labor Department said Friday. Job gains in the October-December quarter averaged 284,000, the best three-month increase since last January.
The strong hiring underscores the resilience of the United States at a time of slow global growth and financial turmoil. Healthy consumer spending, modest gains in home construction and an uptick in government spending should offset drags from overseas and bolster growth this year, economists said.
The report “immediately puts to rest a lot of the worries that the U.S. economy will come undone due to the intensifying global headwinds coming out of China and the Middle East,” said Mark Vitner, an economist at Wells Fargo.
For all of 2015, employers added 2.65 million jobs, a monthly average of 221,000. That made 2015 the second-best year for hiring since 1999, after 2014.
The unemployment rate has held at 5 percent for the past three months, despite the solid job gains, because nearly 1 million more Americans have begun seeking work since September.
Wages were the one weak spot in December, as average pay slipped a penny to $25.24 an hour. Hourly pay has risen 2.5 percent in the past year, only the second time since the Great Recession ended in mid-2009 that it’s reached that level. Yet pay growth remains below the roughly 3.5 percent pace typical of a healthy economy.
The U.S. “is uniquely positioned among the major industrial economies to withstand a global slowdown,” Vitner said.
Global trade accounts for just about 30 percent of U.S. economic activity, one of the lowest such percentages in the world, according to Patrick O’Keefe, director of economic research at the consulting firm CohnReznick.
A resilient U.S. economy will probably help some other countries by drawing in more imports, especially as a higher-valued dollar holds down the prices of foreign goods. The World Bank said this week that Mexico and emerging markets in Central America should fare better than the rest of South America because of their proximity to the healthier U.S. economy.
Still, the effect could be limited if Americans’ spending remains concentrated in services — from restaurants to health care — rather than factory goods.
At the same time, Friday’s solid jobs report could make it more likely that the Federal Reserve will further raise rates after announcing its first increase in nearly a decade last month. Steady hiring would reduce the supply of people seeking jobs, which could lead to higher pay and possibly help lift inflation closer to the Fed’s 2 percent target.
Many economists expect the Fed to raise its benchmark rate three times this year. Stuart Hoffman, chief economist at PNC Financial Services, said the robust jobs data means the next increase will probably be in March.
The jobs report contained no signs of inflation. That led other economists such as Alan Levenson at T. Rowe Price to say that Fed officials may need to see prices climb more before raising rates again.
Signs emerged this week that China’s economy may be slowing more than expected. Its manufacturing activity shrank last month for the 10th month in a row. And China’s central bank let its currency, the yuan, weaken, a move that could help its exporters.
That attempt to boost growth was interpreted as another sign of sluggishness. China’s stock markets plunged, as did most others around the world, including in the U.S. Oil prices fell to nearly a 12-year low Thursday, as markets anticipated that China will use less oil.
Those headwinds could create longer-term problems for the American economy. Lower stock prices may cause American consumers to spend less. Faltering economies overseas, as well as a strong dollar, have cut into manufacturing exports, which fell to a four-year low in November. And cheaper oil has already caused sharp cutbacks in U.S. drilling jobs. Those layoffs may continue if oil prices stay low.
Yet manufacturing makes up less than one-tenth of U.S. employment. The American economy is much more focused on services.
“People are consuming things that aren’t things, like data plans, restaurant meals, health care and entertainment,” Kevin Logan, chief U.S. economist at HSBC bank, said. “The international turmoil can be shrugged off to some extent.”
Hiring in industries that focus on domestic, rather than overseas, demand ramped up in December. Construction added 45,000 jobs, likely in part because of unusually warm weather. Restaurants and bars added nearly 37,000.
Slim Chickens, a restaurant chain in Fayetteville, Arkansas, with 30 locations, plans to open 20 restaurants this year, creating about 800 jobs. But Chief Operating Officer Sam Rothschild said it’s become harder to find workers, particularly in places where unemployment has fallen as low as 2 percent, as in parts of Nebraska and Oklahoma. The company raised pay as much as 10 percent last year in those areas.
Chris Warrington, CEO of GeoDigital, a 3-D mapping company based in Atlanta, has also struggled to hire highly skilled workers in fields like artificial intelligence and machine learning.
“We are having to pay a little over what we expected,” he said.