WASHINGTON – Ending 2006 on a positive note, employers boosted hiring and fattened workers’ paychecks in December, capping a year in which the country’s unemployment rate averaged a six-year low of 4.6 percent.
The latest snapshot of the nation’s employment climate, released Friday by the Labor Department, suggested that most businesses held up pretty well as the real-estate bust caused the economy to lose momentum last year.
Employers added 167,000 new jobs to their payrolls in December, and the unemployment rate held steady at 4.5 percent.
That showing was “rock solid,” said Nigel Gault, economist at Global Insight.
But on Wall Street the strong report sent stocks tumbling. It dashed investors’ hopes that the Federal Reserve would soon slice interest rates to bolster the economy. The Dow Jones industrial average dropped 82.68 points to 12,398.01 – the biggest one-day decline since Nov. 27. The Dow had sunk by more than 115 points in earlier trading.
The tally of jobs exceeded forecasts and was the most since September. Employment gains also turned out to have been stronger in both October and November with 29,000 more jobs being created in those two months combined than the government had estimated.
Sharing in last month’s gains were architectural and engineering outfits, hospitals and doctors’ offices, banks, computer design firms, bars and restaurants, hotels and motels, and schools. Those increases swamped job losses in construction and manufacturing that reflected fallout from the troubled housing and automotive sectors. Retailers also cut workers.
“The economy seems to be weathering the storm clouds in the auto and housing industries. Employers are putting out the hiring signs – though they are not being overly aggressive – and workers are earning more money,” said Lynn Reaser, chief economist at Bank of America’s Investment Strategies Group.
For all of 2006, the economy added 1.8 million jobs, or an average of 153,000 a month, which was down from an average of 165,000 a month in 2005. The job creation was sufficient to help pull down the unemployment rate to 4.6 percent last year from an average of 5.1 percent in 2005.
With the economy losing momentum, many economists predict the jobless rate will climb this year and average around 4.9 percent.
Paychecks grew briskly last month.
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