US businesses added 250,000 jobs in December

U.S. businesses wrapped up 2017 with another month of robust hiring while congressional Republicans and the White House signed off on a sweeping tax-reform package.

Companies added 250,000 jobs in December, up from 185,000 in November, the most jobs in a month since March, according to the payroll processor ADP’s latest report released on Thursday.

{mosads}The job gains were spread across all sectors and industries, with retail and professional services seeing a surge bolstered by consumer spending over the holidays.

“My sense is that tax cuts probably have their fingerprints on the employment numbers,” said Mark Zandi, chief economist of Moody’s Analytics, who helps oversee the ADP data.

“I think we should see relatively strong employment numbers and overall economic growth through first couple or three quarters through 2018 as the tax-cut effects filter through the economy,” he said.

The tax package is expected to lift economic growth to a 2.9 percent rate, up from an initial estimate of 2.6 percent, Zandi said. 

In December, professional and business services added 72,000 jobs, education and health care added 50,000 and trade and transportation, which are tied to holiday deliveries, tacked on 45,000 jobs.

“Robust Christmas sales prompted retailers and delivery services to add to their payrolls,” Zandi said.

Construction added 16,000 jobs and manufacturing added 9,000.

On Friday, the Labor Department will release December’s jobs figures that combine government and private hiring. Estimates are that 198,000 jobs were added last month and the unemployment rate held at 4.1 percent, maintaining a 17-year low. 

Unemployment is expected to fall relatively quickly through 2018 to the mid-3 percent range, which will create some of the tightest labor market conditions since the 1950s, Zandi said. 

The jobless rate has sporadically fallen into the 3-percent range over the past 60 years but has rarely maintained that level, Zandi said. 

While the labor market is expected to improve in 2018 and in turn boost economic growth, economists warn that there is a potential for overheating.

Meanwhile, the stock market has been surging in recent months in anticipation of a cut in the corporate tax rate.

On Thursday, the Dow Jones industrial average eclipsed 25,000 for the first time in its history. 

Greg McBride, chief financial analyst, said that with “positive fundamentals – an expanding economy, continued job growth, still low interest rates and tax reform that promises to boost corporate earnings — it’s no surprise to see the market continuing to climb.”

“Just remember, markets go the other way too from time to time, and its been nearly two years since any notable pullback,” McBride said.

“Don’t be concerned — or surprised — when that happens, as long as the economic and earnings fundamentals remain positive.”

Tags economy Mark Zandi Tax Unemployment
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