The US job market continued to showing healthy gains, adding a better-than-expected 252,000 jobs in December — ending its best year for employment gains since 1999 — but wages remain stuck in the mud, the Labor Dept. said Friday.
The unemployment rate fell two notched to 5.6 percent from 5.8 percent in November.
"We have continued, solid job growth," Michael Feroli, chief US economist at JPMorgan Chase told Bloomberg. Feroli projected a 240,000 gain.
"It shows really solid momentum in US growth," he added. "There are not a lot of places in the world where we see that these days. The oddity in the report is the move down in average hourly earnings."
Certainly, the drop in wages has many on Wall Street stumped.
Hourly wages fell 0.2 percent, or 5 cents, in December, the biggest decline since records in this area started being kept in 2006, to $24.57 an hour.
The drop completely reverses the 0.2 percent gain posted in November.
Using a wider focus, wages grew a meager 1.7 percent for 2014 — that's less than the 1.9 percent hourly wage growth recorded in 2013.
Usually, when the labor market tightens — as the 11 straight months of 200,000-plus job growth and the drop in the unemployment rate would suggest is happening — demand for workers increases and wages rise.
Chris williamson, chief economist at Markit, too, was confounded by the weak wage results.
"Once again, the fly in the ointment was wage growth, a downturn in which suggests that the recent improvements seen in the economy are still not feeding through to employees," he said.
Five years out from the Great Recession, wage growth should reach 3 percent or higher, economists said.
Weak pay hikes are keeping workers' real income only slightly ahead of inflation, damping their purchasing power. Consumer spending accounts for roughly two-thirds of economic activity in the US, so an uptick in wages is vital to broader growth.
Other top-line job numbers from the report are sure to bouy the markets. For example:
- November's strong hiring report of 321,000 new jobs was revised up to 353,000 while October was revised up 18,000 jobs to 261,000.
- Among the hottest jobs areas in the US in December were: construction, which added 48,000 jobs, well above the recent trend, specialty trade contractors, which added 26,000, with the gain about equally split between residential and nonresidential contractors, food services and drinking places, which saw an increase of 44,000 jobs — again ahead of the 30,000 a month pace the was the 2014 average. Health care jobs rose by 34,000.With Post wires
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