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December Jobs Report Unsurprising, Strong Job Growth Not Expected in 2013

Despite the economic uncertainty caused by the fiscal cliff, 155,000 jobs were added in December, which was on par for 2012 where the average number of monthly jobs added was 153,000. This monthly gain brought the year-end total of jobs created to 1.84 million. The unemployment rate was unchanged from the revised November number of 7.8 percent, which is the lowest it has been since December 2008.

All-in-all economists find this report to be unsurprising. Employers didn’t panic in December before a deal could be struck in Washington, but they also didn’t go out on a limb to increase hiring over what was done in previous months. It appears as if the economy is moving sideways and robust growth is still far from reach. This isn’t expected to change in 2013.

So What Did Grow?

The sectors that experienced the most growth were health care (+45,000), food services and drinking places (+38,000) and construction (+30,000).

The strong job growth in health care is not surprising as this is an industry that suffered little during the Great Recession and continued to see strong growth even while all other industries were suffering. Demand for health care services is high due to both an aging population and health care reform. The PayScale Index has also shown wage growth in the health care industry to be relatively strong over the last six years, mirroring the employment growth.

Job growth in the construction sector is an encouraging sign for the economy as this sector took a heavy hit in 2009, both in terms of jobs and wages, and has seen very little recovery until recently. Much of this growth is likely attributed to rebuilding efforts from Hurricane Sandy, but there has also been a solid increase in the demand for new housing construction. The U.S. Department of Housing and Urban Development found the demand for building permits in November 2012 increased almost 30 percent over November 2011.

5-Year Anniversary of the Great Recession

The Great Recession officially started in December 2007 and thus December 2012 marked the 5 year anniversary of its start. Everyone keeps talking about how the recovery is sluggish and recessionary effects are still being felt throughout the economy, but what really has changed since the onset of this recession in terms of employment?

Below is a chart looking at the number of employed persons from December 2007 until December 2012. As you can see, employment dropped significantly between December 2007 and December 2009 – roughly 8 million jobs were lost. Since December 2009, roughly 5 million jobs have been added. In other words, we have come a long way, but we still have far to go. Lackluster job reports like that from December 2012 are not very encouraging when considering the ground that still needs to be recovered to simply get back to pre-recessionary employment levels, let alone expansionary levels.

Employment-chart-dec2012

Katie Bardaro is the lead economist and director of analytics for PayScale.com.

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