WASHINGTON -- U.S. employers added 148,000 jobs in December, a modest gain but still enough to suggest that the economy entered the new year with solid momentum.
The Labor Department on Friday said the unemployment rate was 4.1 percent, the same as in November. And average hourly earnings grew by 9 cents, to $26.63, bringing the year-over-year increase to 2.5 percent.
The modest but steady pace of hiring is a reassuring sign for investors who have been buoyed by the just-passed Republican tax plan and have been sending stock market indexes roaring to record highs.
The unspectacular pace of job growth and wage increases is welcome news for financial markets, experts said, because if the numbers were much higher, investors would grow concerned that the Federal Reserve might accelerate its interest rate increases to ward off inflation. Higher rates, in turn, could slow the economy and send stocks down.
Taken as a whole, Friday's report pointed to the job market's strength and resilience 8½ years into an economic expansion. Hiring remains steady and is underpinning an economy that's both contributing to and benefiting from an improved global outlook. The tax cuts are raising hopes for faster growth and higher corporate profits, and fueling powerful gains in financial markets.
"I think it's going to be an awfully good year," said Carl Tannenbaum, chief economist at Northern Trust. "Absent something unforeseen, this could be one of the best years of the expansion."
Investors again sent stock prices higher Friday, one day after the Dow Jones industrial average broke through the 25,000 mark for the first time.
"You've got the 'Goldilocks' pace for markets: Strong growth and low inflation," Tannenbaum said.
The slowing pace of job growth isn't surprising: It typically happens when unemployment falls to ultra-low levels and fewer people are available for hiring. Average monthly job growth has declined to 171,000 this year from a peak of 250,000 in 2014. Last year's gains were the fewest since 2010.
Despite low unemployment and the difficulty some employers face in finding enough qualified workers, pay gains remain sluggish. Average hourly earnings rose 2.5 percent in December from a year earlier -- about a full percentage point lower than is typical in a healthy economy.
Friday's unemployment report offers a picture of how the economy fared in President Donald Trump's first year in office. The numbers will be revised at least twice in the next months. But the data suggest that things have been going quite well.
The December gain is the 87th consecutive month of job growth, an unparalleled stretch of good news for workers, who continue to be in high demand.
Job growth for the year was slightly less robust than in 2016 under President Barack Obama. Most economists think presidents do not generally determine the course of the economy, although that has not stopped Trump from taking credit.
In a Twitter post Wednesday, the president pointed to the unemployment rate as evidence that the economy is "only getting better!"
Gary Cohn, the top economic adviser to Trump, said Friday that he wanted monthly job growth of more than 200,000. The corporate and individual tax cuts that took effect Monday will help push hiring back up to that level this year and spur higher worker pay, he said on Bloomberg TV.
"We see the economy continuously growing and continuously adding jobs, and remember tax reform is now 5 days old and the input that that's going to have into the economy is ... just barely starting to have an effect," Cohn said. "We are committed to real wage growth and we do believe you'll see it over the course of the next year or two."
Solid economic growth in both the United States and major countries overseas is supporting more overall hiring. Factory managers say new orders grew more quickly in December than in any month since 2004. Retailers have reported strong Christmas sales. Builders are ramping up home construction to meet growing demand.
Last month, blue-collar hiring showed solid gains: Manufacturing and construction added 25,000 and 30,000 jobs, respectively. A category that includes hotels and restaurants gained 29,200.
Retailers cut 20,300 jobs, mostly in department store chains such as Macy's, which announced this week that it would close 11 additional stores. That suggests that stores hired fewer seasonal workers for the holidays, a sign of the effects of e-commerce.
Most economists expect the Trump administration's tax cuts to help speed the economy's already decent pace of growth. Some envision the unemployment rate dropping as low as 3.5 percent by the end of 2018. That would be the lowest rate in nearly a half-century and could force employers to raise pay at a much faster pace to attract workers. Many businesses might also seek to automate some tasks to slow labor costs.
Tom Gimbel, chief executive of the LaSalle Network, a recruiting firm in Chicago, said his clients are eager to hire and are willing to pay higher fees to attract workers who already have jobs. Some of his clients are expanding their human resources departments because they expect hiring to be more difficult with unemployment so low.
"In 23 years, it's the best job market I've ever seen," Gimbel said. "I don't see that changing."
Many business are already howling that they can't find enough qualified people. There are roughly 6 million available jobs, near a record high, according to government data.
Wayne Jones, chief executive officer of Anthony's Coal-Fired Pizza, a 65-restaurant chain, says his company had to work harder to find employees when it opened its first restaurant in Chicago in October. After a successful Christmas season, the chain expects to open another restaurant in Chicago in the spring, creating roughly 70 jobs, and three more restaurants by year's end.
In Chicago, the chain took longer to staff up for its first restaurant, in order to find the right candidates. The company has kept wage growth above inflation: A starting cook can make up to $16 an hour.
"As the economy picks up steam," Jones said, "you can feel there's more pressure on wages."
Information for this article was contributed by Christopher S. Rugaber of The Associated Press, Natalie Kitroeff of The New York Times and Jim Puzzanghera of the Los Angeles Times.
A Section on 01/06/2018