Today’s employment report shows that private sector payrolls increased by 113,000 in December, capping 12 consecutive months of growth that added 1.3 million private sector jobs to the economy during 2010, the strongest private sector job growth since 2006. The unemployment rate fell 0.4 percentage point to 9.4 percent last month.
The overall trend of economic data over the past several months has been encouraging, due in large part to the initiatives passed by this Administration, but we still have a ways to go. The measures we worked with Congress to pass last month that continue tax cuts for the middle class and extensions to unemployment insurance are vital to sustaining the recovery. The Administration will also continue to focus on actions that the President has recommended to increase growth and job creation, such as providing incentives to encourage businesses to invest and hire here at home, investing in education and infrastructure, and promoting exports abroad.
In addition to the increases last month, the estimates of private sector job growth for October (now 193,000) and November (now 79,000) were revised up. Including today’s revisions, private sector employers have added an average of 128,000 jobs per month in the 4th quarter, the highest quarterly average in almost four years.
Overall payroll employment rose by 103,000 last month. Among the sectors with the largest payroll employment growth were leisure and hospitality (+47,000), education and health services (+44,000), temporary help services (+15,900), and manufacturing (+10,000). Local government (-20,000) and construction (-16,000) were among the sectors that subtracted from the total.
Even though the unemployment rate fell sharply in December, it is still unacceptably high and we need robust employment growth in order to recover from the deep job losses that began over two years ago. The overall trajectory of the economy has improved dramatically since then, but there will surely continue to be bumps in the road ahead. The monthly employment and unemployment numbers are volatile and employment estimates are subject to substantial revision. Therefore, as the Administration always stresses, it is important not to read too much into any one monthly report.
Austan Goolsbee is Chairman of the Council of Economic Advisers