The U.S. economic recovery kept up its momentum to finish 2014, adding 252,000 jobs in December.
The unemployment rate also fell from 5.8 percent to 5.6 percent in the month, the Bureau of Labor Statistics said in its monthly jobs report. Unemployment has not been that low since June 2008.
Friday’s jobs number was below November’s very strong 321,000. But it was better than Wall Street economists expected.
Revisions to the past two months’ reports also added 50,000 jobs.
With 2.95 million jobs added, 2014 was the best calendar year for employment gains since the dot-com bubble year of 1999. Average monthly job growth for the year was 246,000, up from 194,000 in 2013, which in turn was the best year since the 2008 financial crisis.
The pace of the jobs recovery has accelerated recently, with job creation averaging 289,000 over the past three months.
Not all the news from Friday’s report was encouraging. Following signs of a pickup in wage gains in November, average hourly earnings fell by 5 cents to $24.57.
With that decrease, there are still few signs of rising incomes. Over the past year, earnings are up just 1.7 percent, just enough to keep pace with inflation.
The significant drop in the unemployment rate was also offset by a slight decline in the overall labor force participation rate. The share of all Americans with jobs or looking for work fell by a tenth of a percentage point to 62.7 percent.
Labor force participation has fallen steadily since the financial crisis, a phenomenon that economists attribute both to ongoing demographic changes and to workers getting discouraged by the poor job prospects afforded by the weak economy. Before 2014, the last time labor force participation was as low as 62.7 percent was 1978. Over the past year, however, the rate has not moved significantly.
December’s strong job growth came mostly from the private sector, which accounted for 240,000 jobs. Business support services, healthcare and restaurants were among the strongest industries.
Construction and manufacturing, typically two of sectors with better pay, added 48,000 and 17,000 positions, respectively.
The broad improvement across the labor market in the past year was reflected in the drop in the U-6 unemployment rate, a measure of underemployment that takes into account workers forced into part-time jobs or who are only sporadically involved in a job search. The U-6 rate fell from 11.4 percent to 11.2 percent in December, and is down from 13.1 percent at the same time last year.
With the labor market tightening to end the year, Federal Reserve Chairwoman Janet Yellen and other members of the central bank will be reassured in their plans to move toward raising interest rates later this year.
Wage growth, however, is still too low to put upward pressure on inflation, which has been running below the Fed’s 2 percent target.
In an appearance on CNBC just after the jobs report Friday morning, Federal Reserve Bank of Chicago President Charles Evans said that “if we are going to get inflation up to our 2 percent objective … we are going to have to see wages increase more,” according to a report from Reuters.
