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U.S. Economy Generated 2.2 Million Jobs in 2016

In the last major release of employment conditions under the Obama Administration, the Labor Department reported on Friday that nonfarm payrolls increased by 156,000 positions in December. Marking the seventh year of economic expansion, 2.2 million jobs were generated in 2016, compared with 2.7 million in 2015. Hiring has averaged 180,000 new positions per month over the past 12 months. The December gain was below the 175,000 consensus projection. The change in total nonfarm payroll employment for November was revised up from 178,000 to 204,000 and the change for October was revised down from 142,000 to 135,000. With these revisions, employment gains in November and October combined were 19,000 higher than previously reported.

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Employment in health care rose by 43,000 in December, with most of the increase occurring in ambulatory health care services (30,000) and hospitals (11,000). Health care added an average of 35,000 jobs per month in 2016, roughly in line with the average monthly gain of 39,000 in 2015.

The unemployment rate fell 10 basis points to 4.7% from November. The unemployment rate is derived from a separate survey than the payroll employment number cited above. There are now 7.5 million people out of work. The number of long-term unemployed (those unemployed for more than 6 months) totaled 1.8 million and accounted for roughly 24.2% of those unemployed. In 2016, the number of long-term unemployed declined by 263,000.

Average hourly earnings for all employees on private nonfarm payrolls increased by 10 cents to $26.00 in December. Over the year, average hourly earnings have risen by 2.9%, a seven-year high. Average hourly earnings increased 2.3% in 2015 and 2.1% in 2014. Increases in minimum wage rates in many states and tightening labor markets may start to put further pressure on this measure of earnings.

The labor force participation rate, which is a measure of the share of working age people who are employed or looking for work, was little changed and remained at 62.7% in December. It is very low by historic standards and in part reflects the effects of retiring baby boomers.

The December jobs report paints a picture of a reasonably strong labor market and lends support to the decision by the Federal Reserve to increase interest rates at the last meeting. With wage growth starting to accelerate, the Fed will likely continue on its path of gradually increasing interest rates as the year unfolds.

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About the Author

Beth Burnham Mace

Beth Burnham Mace is the Chief Economist and Director of Outreach at the National Investment Center for Seniors Housing & Care (NIC). Prior to joining the staff at NIC, she served as a member of the NIC Board of Directors for seven years and chaired NIC’s Research Committee. Ms. Mace was also a Director at AEW Capital Management and worked in the AEW Research Group for 17 years. Prior to joining AEW in 1997, Ms. Mace spent ten years at Standard & Poor’s DRI/McGraw-Hill as the Director of the Regional Information Service. She also worked as a Regional Economist at Crocker Bank, the National Commission on Air Quality, the Brookings Institution and Boston Edison.

Ms. Mace is a member of the National Association of Business Economists (NABE), the Urban Land Institute (ULI), ULI’s Senior Housing Council and New England Women in Real Estate (NEWIRE/CREW). In 2014, she was appointed a fellow at the Homer Hoyt Institute and was awarded the title of a “Woman of Influence” in commercial real estate by Real Estate Forum Magazine and Globe Street. Ms. Mace is a graduate of Mount Holyoke College (B.A.) and the University of California (M.S.). She has also earned The Certified Business Economist™ title (CBE) from the National Association of Business Economists (NABE). Ms. Mace is often cited in the Wall Street Journal, the New York Times, Seniors Housing Business, Seniors Housing News and McKnight’s Senior Living and has a bi-monthly column in the National Real Estate Investor.
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