The U.S. is seeing continued momentum for the labor market, according to the Department of Labor’s December Unemployment Situation Report. Unfortunately, a lower labor force participation rate is one reason for the improvement in the numbers.
The unemployment rate declined to 5.6% against a consensus estimate of 5.7%, and the number of unemployed persons declined by 383,000 to 8.7 million, according to the report. Over the course of the year, the unemployment rate and the number of unemployed persons were down by 1.1% and 1.7 million, respectively.
However, the civilian labor force participation rate dropped by 0.2 points to 62.7% in December. That is the lowest rate in years. Also in December, the employment-population ratio was 59.2% for the third consecutive month, according to the report.
Employers added 2.95 million jobs in 2014, the biggest increase for a single year since the number was over 3 million in 1999. The U.S. population increased to more than 318 million in 2014, compared to just 279 million in 1999 (when unemployment was only 4.0%).
Total nonfarm payroll employment increased by 252,000 in December. In 2014, job growth averaged 246,000 per month. The average monthly gain in 2013 was 194,000. In December, the largest increases in employment were seen in construction, professional and business services, food services and drinking places, health care, and manufacturing.
Revised numbers from the report showed employers added 50,000 more jobs in October and November than had been previously estimated. November’s payroll gain was revised to 353,000, up from the initially reported 321,000. October’s was revised to 261,000, up from 243,000.
The average workweek for all employees on private nonfarm payrolls was unchanged at 34.6 hours in December.
Even though there was steady hiring in the month of December, wages fell from November by 0.2%, compared to a consensus estimate of a 0.2% gain. This was up from 1.7% from the previous year, according to the report.