Businesses hired a stunning 312,000 workers in December, capping off a year of robust economic growth, the Labor Department said Friday. Earnings rose at the fastest yearly pace in nine years, increasing 3.2 percent from the year before.
The unemployment rate rose to 3.9 percent, reflecting more people quitting their jobs and people re-entering the labor force.
"The secret sauce here is probably wage increases. Rising wages paired with weakening inflation mean real wages are rising strongly and that's pulling more people into the workforce," said Robert Frick, corporate economist with the Navy Federal Credit Union. "This could boost the economy this year, as more disposable income means more consumer spending," he added.
Stock markets liked the report, with the Dow rising over 490 points, or 2.2 percent, in early trading. The surprisingly high figure for December—economists had expected about 190,000 jobs to be added—shows that the broader economy remains strong despite worries of an economic slowdown.
Pay rose at its fastest rate in nine years, and rose faster for rank-and-file workers than for workers on average.
"Survey after survey, we've found employers complaining about how difficult it is to hire workers, and they're taking a range of ways to deal with that, from spending more on advertising, to raising wages, to being more flexible with scheduling, to recruiting people who have not traditionally been the focus of recruiting," said Julia Pollak, labor economist at the hiring marketplace ZipRecruiter.
The just-ended year saw 2.4 million new jobs created. That's the strongest job creation in two years, highly unusual for an economy in its ninth year of expansion.
"It really was a banner year," said Martha Gimbel, director of economic research at the Indeed Hiring Lab, pointing to the effects of the tax cuts. She added that while monthly job creation above 300,000 was exciting, people should not expect this unusually high figure every month — "and that's ok," she said on Twitter.