As our economy continues to strengthen under President Obama, one key indicator is the robust pace of our recovering job market. In the past two years we have seen more job growth than in any two-year period since 1998-2000. And the average yearly unemployment rate has had the fastest two-year decline in over 30 years.
While there is clearly still much work to do in the areas of job creation and increasing wages in this country, the statistics that have come in from the month of December are a good indicator that we are going in the right direction.
Three Key Factors About The Job Market We Can See From The December Numbers…
1. Under President Obama American businesses have now added 14.1 million jobs over 70 straight months, extending the longest streak on record.
According the just released December numbers private employment rose by 275,000 jobs in December, while private employment growth in October and November was revised up by a combined 51,000 jobs. The unemployment rate held steady at 5.0 percent in December while the labor force participation rate edged up to 62.6 percent. Average hourly earnings for all private employees have now risen 2.5 percent over the past year, the fastest pace since the recovery began. Overall, our businesses have added 5.6 million jobs over the past twenty-four months—the most in any two-year period since 1997-1999.
2. The unemployment rate has actually fully recovered to its pre-recession average for many demographic groups, however the broadest measure of labor market slack remains slightly elevated.
The unemployment rate is fully recovered for both genders and across all racial and ethnic groups reported by BLS. In particular, the African-American unemployment rate is at its lowest level since September 2007, 15 percent below its pre-recession average. The unemployment rate for women is at its lowest level since April 2008, 7 percent below its pre-recession average. Like all labor market indicators unemployment rates for particular demographics tend to be volatile, and it is important to focus on long-term trends in these and other data.
Despite the broad-based recovery, the broadest measure of slack—the “underemployment rate,” or U-6, which includes discouraged workers, those marginally attached to the labor force, and those working part-time for economic reasons—is 90 percent recovered but remains somewhat elevated. Such data indicate that more work remains before the labor market is fully recovered.
3. December was a very strong month for employment growth in most sectors, but global factors continue to restrain job growth in certain industries.
Especially strong gains relative to the past year were seen in industries such as transportation and warehousing (+23,000), information services (+16,000), and construction (+45,000). Manufacturing (+8,000) also had a stronger-than-average month, although slowing foreign demand continues to weigh on growth in that sector relative to 2014. Mining and logging employment, which includes oil extraction, continued to decline (-8,000) as low oil prices have slowed investment. Across the 17 industries shown below, the correlation between the most recent one-month percent change and the average percent change over the last twelve months was 0.82, somewhat above the average correlation over the previous three years.