The economy added 155,000 jobs in December, according to new data from the Labor Department. The new payrolls reading is roughly in line with consensus estimates of around 150,000 and a slight decline from November, when American payrolls added 161,000 jobs. The new jobs did not budge the unemployment rate from November's 7.8 percent, an upward revision from a previously reported 7.7 percent for that month.
Health care and social assistance, an industry that has been strong throughout the economic recovery, added 55,000 jobs in December, and the leisure and hospitality industry, which includes restaurants and hotels, added 31,000 jobs.
The goods-producing sector also showed signs of growth. The construction industry added 30,000 jobs last month, with manufacturing firms adding 25,000. While rebuilding after Hurricane Sandy may have contributed to the construction figure, new construction jobs also may reflect recent signs of a strengthening housing recovery. The new jobs in goods-producing industries is an encouraging sign, considering that the services sector has generally led job growth throughout the recovery.
The report represents another month of middling job growth, capping off a year in which the economy continued to improve, albeit slowly.
"Essentially, 2012 was a mediocre year," says Patrick O'Keefe, director of economic research at accounting firm CohnReznick. "It was a year in which the labor conditions advanced enough to avoid backsliding, but not really enough to gain ground."
The underlying trend job growth has been holding at around 150,000 jobs per month, as Moody's Analytics economist Mark Zandi explained after Thursday's ADP private payrolls report. December's jobs report does little to buck that trend.
Still, the new jobs came amid the headwinds of the fiscal cliff. December was marked by gridlock as politicians wrangled over planned spending cuts and tax hikes. While it seemed that uncertainty might threaten hiring, it appears that businesses instead chose to cut back in other areas, such as equipment and facilities.
"I don't think it's weighed on hiring as much as it's weighed on investment decisions," says Stuart Hoffman, chief economist at the PNC Financial Services Group. He points out that business investment ground to a halt in the third quarter, and fourth quarter figures may show a similar trend when they are released. The first fourth quarter GDP report, which includes data on business investment, will be released January 30.
Even with the fiscal cliff averted, there is plenty of uncertainty ahead: Lawmakers must still consider automatic spending cuts, which the fiscal cliff deal postponed until March, not to mention raising the debt ceiling. That murky policy outlook could be just one factor holding back job growth in 2013.
"I don't know if it will get a lot stronger. We have job growth this year at about the same pace as last year: 150,000 a month, maybe 175,000," Hoffman says.
For all the attention that the fiscal cliff has received, however, business owners are looking to consumers, not just lawmakers, to guide their investment and hiring. And if consumers are reluctant to open their pocketbooks, no amount of policy certainty can bring the job market fully back to its former health, meaning that business owners could remain leery of new investment throughout much of the coming year.
"I remain in the camp that says employers going into 2013 bring that same cautious decision-making to every aspect of their management," O'Keefe says. "They're not going to make commitments to additional workers or additional investment until there are customers who are showing them the money."