The U.S. economy added 148,000 jobs in December after a year of steady hiring, missing expectations for a larger last-minute surge, the government reported Friday.
The unemployment rate stayed at 4.1 percent last month, the lowest point since 2000. Wages continued their slow climb, rising by 9 cents to $26.63. That’s a 2.5 percent increase since December 2016 (and still below pre-recession levels).
President Trump's first year in the White House brought healthy growth and 2.1 million new jobs, a slight drop from 2.2 million positions created during Obama's last year in office, government estimates showed Friday.
The average number of jobs employers added each month in 2017 was 173,000, compared to the previous year’s 187,000.
One dark spot was retail, which lost 20,000 jobs in December, according to the Bureau of Labor Statistics. About 67,000 positions vanished from stores in 2017, a sharp reversal from the 203,000 jobs that were added in 2016.
“That’s a notoriously volatile number around the holiday season, but it also reflects in part that increasing number of sales are coming from e-commerce and not brick and mortar stores,” said David Berson, chief economist at Nationwide. “That’s part of a longer term decline in that sector.”
Labor Secretary Alexander Acosta said in a statement Friday that the December report reflected “steady growth.”
“With President Trump signing tax reform into law, 2018 will continue last year’s successes and, we hope, bring needed increases in wages and labor force participation,” he said. “Job creation, wage growth, and retirement savings drive prosperity and financial security. Strong growth in all is necessary.”
Manufacturing saw strong gains in December, adding 25,000 jobs. The industry generated 196,000 jobs last year, compared to a loss of 16,000 positions in 2016.
Analysts had predicted between 200,000 and 250,000 new positions would be created in December.
“It’s certainly disappointing, but we’re still topping off a strong year for job creation, said Mike Loewengart, vice of president of investment strategy at E*TRADE, a financial services company in New York.
The BLS report still sends a promising message to job seekers: Employers will be increasingly desperate for your applications in 2018. And while wages stayed flat in 2017, the unemployment rate sank at a faster pace, which gives economists hope that raises are on the horizon.
“There’s almost one job open for every unemployed person,” said Dan North, chief economist at Euler Hermes North America, a credit insurance firm.
There are now six million vacancies in the United States and 6.6 million unemployed people, to be more precise.
However, companies nationwide keep struggling to fill roles, citing tight labor markets, retiring baby boomers and failed drug tests. Factories, hospitals, contractors and eateries, among other employers, face this trouble.
“Restaurants are finding it extremely challenging to find workers,” Sonia Riggs, president and chief executive of the Colorado Restaurant Association, said in an email. “Many have even eliminated drug testing because finding employees is so difficult.”
Employers increasingly are turning to on-the-job training to find and retain employees — but that could be keeping wages down.
“In manufacturing and metals, especially, employers have been saying to me, ‘I could grow faster if I could find somebody, anybody,' ” said North, the economist. “They’ll hire whoever they can find, pay them a low wage and train them up.”
Roughly 10,000 baby boomers turn 65 each day, and not enough young workers are cycling in to replace them.
One forecast from Goldman Sachs predicted the unemployment rate will dip to 3.5 percent by the end of next year, the lowest since 1969.
"Such a scenario would take the U.S. labor market into territory almost never seen outside of a major wartime mobilization," Goldman Sachs chief economist Jan Hatzius wrote in November.
Economists can’t agree on why wages haven’t lifted with the demand for workers. As paid training spreads and more workers master skills that boost their productivity, paychecks should grow too, as companies compete for workers, said Josh Wright, chief economist at iCIMS, a hiring software company.
“We’ll see more turnover,” he said. “Employers will be poaching more workers, and if workers feel undervalued, thinking, ‘I should have gotten that raise,’ they’re going to make a move.”
That could be especially true in health care, which drove much of the job growth in 2017 and doesn’t appear to be slowing down.
Nurses, physician assistants, home health aides and physical therapists are among the country’s fastest-growing jobs as the population ages.
While manufacturing has enjoyed a four-month growth streak, analysts expect the sector to remain a sliver of the economy, compared to service-based work.
But the hiring blitz hasn’t touched every corner of the country. West Virginia, where mining jobs have faded in recent decades, still has one of the highest jobless rates in the country (5.3 percent), and Ohio, which was hit hard by the manufacturing downturn, continues to grapple with a higher-than-average share of unemployed people (4.8 percent).
“We can’t just say everything is roses,” said Robert Frick, corporate economist at the Navy Federal Credit Union.
People in areas where opportunities have declined are showing less desire to pack up and leave. In 2017, only 11.2 percent of Americans relocated, the smallest share since the Census began tracking it in 1948. Of those who moved, fewer than a fifth said they left for an employment-related reason.