US gains 252K jobs as unemployment falls to 5.6 percent

The United States capped its best year for hiring in 15 years with a healthy gain in December, and the unemployment rate reached a six-year low. The numbers support expectations that the U.S. economy will strengthen further this year even as overseas economies stumble.

The Labor Department said Friday that employers added 252,000 jobs last month and 50,000 more in October and November combined than it had previously estimated. The unemployment rate also dropped to 5.6 percent from 5.8 percent in November, the lowest rate since 2008.

Yet wage growth remains weak. Average hourly pay slipped 5 cents in December. And the unemployment rate fell partly because many of the jobless gave up looking for work and were therefore no longer counted as unemployed.

The U.S. economy's steady improvement is striking compared with weakness in much of the world.

Europe is barely growing, and its unemployment rate is nearly double the U.S. level. Japan, the world's third-largest economy, is in recession. Russia's economy is cratering as oil prices plummet. China is straining to manage a slowdown. Brazil and others in Latin America are struggling.

Fears about significantly cheaper oil spooked investors earlier this week before financial markets recovered. But most economists remain optimistic that lower energy prices will benefit U.S. consumers and many businesses and give the American economy a further boost.

The U.S.'s improving jobs picture has healed some of the deep scars left by the Great Recession. The number of people who have been unemployed for more than six months fell 27 percent last year. And the number working part time who would prefer full-time work dropped 12 percent.

Still, much healing remains to be done. To keep up with population growth since the recession began, the economy needs to create 4.9 million additional jobs, according to the Brookings Institution. Average hourly pay is barely staying ahead of inflation, dropping five cents in December after rising six cents the previous month.

Wage growth has been frustratingly tepid and economists believe the Federal Reserve will be hesitant to pull the trigger on raising interest rates without a significant increase in labor costs.

The U.S. central bank has kept its short-term interest rate near zero since December 2008.

It has not raised interest rates since 2006, but recently signaled it was moving closer to hiking, even if inflation remains below the Fed's 2.0 percent target. Most economists expect the first rate increase in June.

But an acceleration in wage gains is in the cards as the labor market continues to tighten.

That, together with lower gasoline prices are expected to provide a tail wind to consumer spending this year. Goldman Sachs estimates that the additional spending on restaurants, auto dealers and other goods and services will lead to the creation of 300,000 more jobs this year than if oil prices remained at their June levels.

Spending at retail stores and restaurants rose in November by the most in eight months, an early sign that Americans are already spending some of the savings they are enjoying on gas-pump prices.

Car sales jumped 6 percent last year to the highest level since 2006, according to Autodata Corp. Analysts forecast that sales will reach 17 million this year, near the record of 17.3 million set in 2000. That should lead to more jobs at automakers, parts suppliers and dealers.

Wire services