Economic Watch: Job Creation Soars, Trucking Employment at Record High
January 08, 2016
Job creation in the U.S. surged in the final month of 2015, according to a Labor Department report released Friday, as for-hire trucking employment hit a new record level.
Overall U.S. payrolls grew by 292,000, far greater than many analysts expectations. The unemployment rate was unchanged at 5%, as more people resumed looking for work, and down from 10% in October 2009.
An average of 221,000 jobs per month were added in 2015. That’s down only modestly from the 260,000 average monthly increase in 2014, which marked the largest annual pace since 1999.
The one downside is that wages fell slightly during the month. But they still managed to show an annual improvement of 2.5%, better than the rate of inflation.
For-hire trucking added 5,300 jobs in December, pushing the total employment figure to 1.462 million, almost 20,000 jobs more than compared to December 2014.
In the wider transportation and warehousing sector, 23,100 jobs were added last month, with more than half of those being courier and messenger jobs.
Employment in the private goods-producing sector rose by 45,000, the strongest monthly increase since January 2015. There was a 45,000 jump in construction employment, with more increased expected (see below). Mining jobs declined by 8,000, thereby marking the twelfth straight monthly drop for the measure. Manufacturing employment rose by 8,000.
“The solid and stronger than expected employment gain in December further validates the Federal Reserve’s decision to hike rates during that month in response to signs of an improving domestic economy and shrinking labor market slack,” said RBC Economics Economist Nathan Janzen.
“We continue to expect that the pace of employment gains during the last two years will become increasingly difficult to sustain in 2016 but will reflect more slower growth in labor supply than a faltering in demand, with most of the slack generated by the 2008–2009 recession now having been absorbed and the underlying working-age-population growth expected to remain historically slow," he added.
RBC Economics is forecasting further tightening in labor markets and the emergence of greater wage pressures will be sufficient to keep the Fed in tightening mode this year, with it expecting the federal funds target range will end 2016 100 basis points (1%) above its current 0.25% to 0.50% level.
“A stronger-than-expected headline increase coupled with a stable unemployment rate at a seven-year low, as well as slightly improved but slightly lower-than-expected wage growth, translates into a big ‘phew’ for the Fed,” said Lindsey Piegza, chief economist at Stifel Fixed Income.
“Coupled with the latest slew of disappointing data from manufacturing to inflation to housing, the recent volatility in the market compliments of China no doubt had at least some Fed officials questioning their decision for liftoff in December," she continued. "Now with this morning’s strength in the jobs report, at least some of those fears have been put to rest.”
In the meantime, this continuing improvement in the nation’s employment picture and expectations it will continue is good news for trucking in that ot means more people are working and buying goods that are delivered by truck.
Expanding employment is also expected in the nation’s construction sector, according to one contractor group, and that translates into more building materials that will need truck transportation.
Seventy-one percent of construction firms plan to expand their payrolls in 2016, as contractors expect a range of public and private markets to grow, according to survey results released by the Associated General Contractors of America.
"The construction industry will continue to recover in 2016 as many firms add to their headcount amid growing demand in a range of private and public sector markets," said Stephen E. Sandherr, the association's CEO.
Association officials said that 71 percent of firms say they will increase their headcount in 2016. Sixty-three percent of firms report their planned hiring will increase total headcount between 1% and 25% while 8% report they will expand their headcount by more than 25% this year.
Contractors expect a mix of private and public sector market segments will drive demand for construction in 2016.