Employers added workers in December at about the same pace asthe prior month, and the unemployment rate matched a four-year low,showing sustained gains in the U.S. labor market even as lawmakerswere struggling to reach a budget deal.

Payrolls rose by 155,000 workers last month following a revised161,000 advance in November that was more than initially estimated,Labor Department figures showed today in Washington. The medianestimate of 82 economists surveyed by Bloomberg called for anincrease of 152,000. The unemployment rate held at 7.8 percent,matching the lowest since December 2008.

Improved hiring, hours worked and wages are helping underpinspending at retailers from Macy's Inc. to Gap Inc., where Decembersales beat analysts' estimates. Even bigger advances in employmentmay depend on lawmakers reaching an agreement on adeficit-reduction plan after Congress this week averted income-taxincreases on about 99 percent of households.

“The labor market continues to recover,” Brian Jones, a seniorU.S. economist at Societe Generale in New York, said before thereport. “The pace of hiring is respectable, and the unemploymentrate will gradually keep coming down. With the fiscal cliff havingbeen averted, this should be good for job growth. The labor marketwill continue to make progress this year.”

Bloomberg survey estimates ranged from increases of 80,000 to305,000. Revisions to prior reports added a total of 14,000 jobs topayrolls in the previous two months.

The economy created 1.84 million jobs for a second straightyear.

Annual revisions to the household survey showed the unemploymentrate averaged 8.1 percent in 2012, the lowest in four years.

Average hourly earnings climbed 2.1 percent from December 2011,to $23.73, the biggest gain in a year, today's report showed. Theaverage work week for all workers climbed to six minutes to 34.5hours.

Private payrolls, which exclude government agencies, rose168,000 in December after a revised gain of 171,000. They wereprojected to rise by 155,000, the survey showed.

Factory payrolls increased by 25,000, the most since March andcompared with the Bloomberg survey forecast of a 4,000increase.

Employment at private service-providers increased 109,000.Retailers decreased staff by 11,300. Construction companies added30,000 workers, the most since September 2011. The figures may havereceived a boost from rebuilding efforts following superstormSandy, which left about 8 million homes and businesses withoutpower for days after making landfall on Oct. 29.

Government Jobs

Government payrolls decreased by 13,000 in December, the thirdstraight month of declines.

Progress in the labor market is driving Americans' confidenceand spending. Macy's, the second-biggest U.S. department-storecompany, reported a 4.1 percent rise in December sales at storesopen at least a year, while Gap, the largest U.S. specialty-apparelretailer, had a 5 percent increase.

Congress this week reached a compromise that averted theso-called fiscal cliff of $600 billion in tax increases andgovernment spending cuts. At the same time, a battle still loomsover raising the $16.4 trillion debt limit, and on automaticspending reductions, known as sequestration, that were delayed fortwo months.

Some chief executive officers including David Cote of HoneywellInternational Inc. are urging lawmakers to move quickly.

“A plan that will truly help to expand the U.S. economy over thelong term” is needed, Cote, who leads the maker of flight controlsand thermostats, said in a Jan. 2 e-mailed statement.

“We're in the same old fight with uncertainty still in themarket,” said Brad Thompson, CEO of employee-owned Columbia ForestProducts Inc., the largest North American maker of decorativehardwood plywood.

The path to faster hiring in late 2012 was made difficult byconcern over the possibility of fiscal tightening. Cintas Corp., aCincinnati-based provider of uniforms and safety products, noted a“wait-and-see attitude” among clients, Chief Financial OfficerWilliam Gale said on a Dec. 20 earnings call with analysts.

Motor Homes

In contrast, Winnebago Industries Inc., a Forest City,Iowa-based maker of motor homes, was expanding to increaseproduction. The company hired about 160 people, or 12 percent morehourly employees, in the quarter ended Dec. 1.

“We're still supplementing by working overtime in many, manyareas of the company,” Sarah Nielsen, chief financial officer, saidon a Dec. 20 earnings conference call. “That's been a factor forthe last six months plus. And we're going to have to continue tohire to support attrition.”

The goal of faster progress in the economy and labor market isone reason Federal Reserve policy makers, four years after cuttingthe main interest rate to around zero, have expanded their thirdround of so-called quantitative easing. The central bank on Dec. 12said it would hold borrowing costs low “at least as long” as theunemployment rate remains above 6.5 percent and inflationprojections are for no more than 2.5 percent.

Bloomberg News

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