Economy Shrugs Off Weak Housing and Automotive Sectors As Employers Add 167,000 Jobs in December

Employers stepped up hiring last month, boosting payrolls by a brisk 167,000 and keeping the unemployment rate steady at a still historically low 4.5 percent. Workers' wages grew briskly.

The latest snapshot of the nation's employment climate, released Friday by the Labor Department, showed that the jobs market ended 2006 on a strong note and provided fresh evidence that the troubled housing and automotive sectors aren't dragging down employment across the country.

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The tally of new jobs added to the economy last month exceeded analysts' forecasts for a gain of around 115,000 and was the best showing since September. Analysts were predicting the politically sensitive jobless rate would remain unchanged from November, which it did.

For all of 2006, the nation's unemployment rate dropped to a six-year low of 4.6 percent. In 2005, the unemployment rate averaged 5.1 percent.

With the economy losing momentum, though, many economists predict the jobless rate will climb this year and average around 4.9 percent.

Employers showed not only a greater appetite to hire in December but also more willingness to boost compensation to workers.

Workers, many of whom had seen their paychecks eaten by inflation, saw wages grow robustly last month. Average hourly earnings jumped to $17.04, a sizable 0.5 percent rise from the prior month. Analysts were forecasting a more modest, 0.3 percent increase.

Over the last 12 months, wages grew by a strong 4.2 percent. That matched the annual gain registered in November and was exceeded only by a 4.3 percent annual increase in November 2000.

Growth in wages should support consumer spending — a force that helps drive the economy. But a rapid and sustained advance — if not blunted by other economic forces — can stoke concerns about inflation.

Federal Reserve Chairman Ben Bernanke says the central bank will be on close watch for any signs that wage growth might be spurring an unwanted pickup in inflation.

The Federal Reserve, which has boosted rates 17 times since June 2004 to fend off inflation, has been on the sidelines since August. Analysts believe the Fed will keep its finger on the interest-rate pause button when it meets next on Jan. 30-31.

The latest employment snapshot comes as the new Democratic-controlled Congress, which convened Thursday, will now play a lead role in shaping policies for workers and businesses.

A top priority for Democrats is boosting the federal minimum wage from $5.15 an hour to $7.25 an hour. President Bush said he supports such a move as long as it is paired with business-friendly provisions, which would soften the sting to employers who would have to dole out more in labor costs.

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