(AP Photo/Mary Altaffer)
A survey showed private hiring increased last month, while layoffs declined and applications for unemployment benefits stayed near a four-year low. The data led some economists to raise forecasts for December job growth before the government releases its closely watched employment report.
"The job market held firm in December despite the intensifying fiscal cliff negotiations," said Mark Zandi, chief economist at Moody's Analytics. "Businesses even became somewhat more aggressive in their hiring at year end."
The most encouraging sign came from payroll provider ADP. Its monthly employment survey showed businesses added 215,000 jobs last month, the most in 10 months and higher than November's total of 148,000.
Economists tend to approach the ADP survey with some skepticism because it has diverged sharply at times from the government's job figures. The Labor Department released its employment report Friday. U.S. employers actually added 155,000 jobs in December, a steady gain that showed hiring held up during the tense negotiations to resolve the fiscal cliff.
The solid job growth wasn't enough to push down the unemployment rate, which remained 7.8 percent last month, the Labor Department said Friday. The rate for November was revised up from an initially reported 7.7 percent.
Friday's report did point to some weakness in the job market. For example, the number of unemployed actually rose 164,000 to 12.2 million. Approximately 192,000 people entered the work force last month, but most of them didn't find jobs.
Unemployment figures come from a survey of households; the number of jobs that were added each month comes from a separate survey of businesses.
The government said hiring was stronger in November, for which job gains were revised upward by 15,000 to 161,000, while October was nearly unchanged at 137,000.
Robust hiring in manufacturing and construction fueled the December job gains. Construction firms added 30,000 jobs, the most in 15 months. That increase likely reflected hiring needed to rebuild after superstorm Sandy and gains in home building that have contributed to a housing recovery.
The once-depressed housing market is recovering. Companies ordered more long-lasting manufactured goods in November, a sign that they're investing more in equipment and software. And Americans spent more in November. Consumer spending drives nearly 70 percent of economic growth.
Some economists were hopeful after seeing businesses were less inclined to cut jobs last month.
Outplacement firm Challenger, Gray & Christmas said the number of announced job cuts fell 43 percent in December from November, and overall planned layoffs in 2012 fell to the lowest level since 1997.
The decline in layoffs coincided with a drop last month in the number of people who applied for unemployment benefits. The four-week average was little changed at 360,000 last week. That's only slightly above the previous week's 359,750, which was the lowest since March 2008.
Some economists saw potential for stronger gains after seeing the latest data.
"Given that we have restraints, the labor market data do appear to be improving," said Dana Saporta, an economist at Credit Suisse.
Still, many economists remained cautious about where the job market is headed. While Congress and the White House reached a deal this week that removed the threat of tax increases to most Americans, they postponed the more difficult decisions on cutting spending. And the government must also increase its $16.4 trillion borrowing limit by late February or risk defaulting on its debt.
Congressional Republicans are pressing for deep spending cuts in return for any increase in the borrowing limit. President Barack Obama has repeatedly said he wants the issues kept separate.
The economy has added about 150,000 jobs a month, on average, for the last two years. That's too few to rapidly lower the unemployment rate.
Hiring probably won't rise above the current 150,000 per month trend until after the borrowing limit is resolved, economists say.
A similar fight over raising the borrowing limit in 2011 was settled only at the last hour and nearly brought the nation to the brink of default.
"That's not an environment where you're likely to be taking risks," such as boosting hiring, said Nigel Gault, chief U.S. economist at IHS Global Insight.
Even with modest gains in hiring, the unemployment rate remains high. It fell to 7.7 percent in November from 7.9 percent in October. But that was mostly because many of the unemployed stopped looking for jobs.
The number of people receiving jobless benefits fell to 5.4 million in the week ended Dec. 15, the latest data available. That's down about 70,000 from the previous week. The figure includes about 2.1 million people receiving emergency benefits paid for by the federal government. The White House and Congress agreed earlier this week to extend that program for another year.
Americans spent more in November. Consumer spending drives nearly 70 percent of economic growth.