The U.S. wrapped up a third year of employment growth with a gain in December, showing the world’s largest economy was able to endure an intensifying budget battle on Capitol Hill.
Employers added 155,000 workers last month after 161,000 in November, Labor Department figures showed yesterday in Washington. The jobless rate held at 7.8 percent, matching an almost four-year low, after the November figure was revised up from a previously reported 7.7 percent.
The advance in hiring was accompanied by a bigger-than- projected gain in wages and a longer workweek that will give households the means to sustain spending, benefiting retailers from Macy’s Inc. to Gap Inc. The Standard & Poor’s 500 Index closed yesterday at the highest level since December 2007 on signs an improving jobs picture will help soften any blow to the economy from higher payroll taxes.
“Job growth here is just very steady,” James Glassman, senior economist at JPMorgan Chase & Co. in New York, said yesterday during a radio interview on “Bloomberg Surveillance.” The challenge “is how the rise in the payroll tax affects the consumer, because that is probably a bit of a headwind. Once we are over that, I think there is every reason to believe that the economy should do better than last year.”
The S&P 500 added 0.5 percent to 1,466.47 at the close in New York, putting the gain for the week at 4.6 percent. The index soared 2.5 percent on Jan. 2 after Republicans and Democrats agreed on a compromise budget that avoided the so- called fiscal cliff of sweeping tax increases slated to take effect this year.
Next, Republican leaders in the House are vowing to exact deep spending cuts from President Barack Obama and the Democrats in exchange for raising the debt ceiling as the U.S. Treasury bumps up against its legal borrowing limit.
The jobs report “provides further evidence that the U.S. economy is continuing to heal,” Alan Krueger, chairman of the White House Council of Economic Advisers, said in a statement. “It is important that we continue to move toward a sustainable federal budget in a responsible way that balances revenue and spending while protecting critical investments in the economy and essential support for our most vulnerable citizens.”
A pickup in employment was also evident in a report yesterday on the service industries, which account for almost 90 percent of the economy. The Institute for Supply Management’s non-manufacturing index climbed to 56.1 in December, the highest in 10 months, from 54.7 in November. Readings above 50 signal expansion.