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The numbers: The U.S. gained 312,000 new jobs in December, capping off the biggest increase in hiring in three years and showing that second longest economic expansion in U.S. history still has plenty of staying power despite growing worries about a slowdown.

The surge in hiring was the largest since February. Economists surveyed by MarketWatch had forecast a 182,000 increase.  Hiring in November and October was also stronger than originally reported, the government said Friday.

The unemployment rate, meanwhile, rose to 3.9% from a 49-year low of 3.7%. The percentage of working-age Americans in the labor force climbed to a one-and-a-half-year high as more people looked for jobs. That’s usually seen as a good sign since it means people think work is easier to find.  Strong hiring has also given workers more bargaining power with their bosses. The amount of money the average worker earns climbed 11 cents, or 0.4% to $27.48 an hour last month.

What’s more, the increase in pay in the past 12 months rose to 3.2% from 3.1%, matching a post-recession high set earlier in the year.  The strong jobs gain at year end presents a quandary for the Federal Reserve and Wall Street.

Other reports suggest the economy is slowing, but a tight labor market and rising wages could also put upward pressure on inflation. The Fed has to keep inflation at bay without slowing the economy if it continues to raises rates as expected.

What happened: The increase in jobs was widespread at the end of the year.

Health-care providers hired 50,000 people, professional firms filled 43,000 positions, manufacturers added 32,000 jobs, construction firms beefed up payrolls by 32,000 and restaurants employed 41,000 additional workers.  Some of the increase in hiring in December was likely the result of poor weather in November that kept some workers home in fields such as construction.

Employment gains for November and October, however, were also revised upby a combined 58,000.

Indeed, the U.S. added an average of 254,000 jobs a month in the fourth quarter, the biggest increase since 2016.

Big picture: The economy is still on sound footing despite signs of softening in areas such as housing and manufacturing. As long as most Americans are working, a recession is unlikely in 2019.  The big worry is that a global economic slowdown will hurt U.S. corporate earnings and spur companies to reduce hiring or even lay off more workers. The Fed has also been gradually raising interest rates, making it more expensive to borrow to buy a home or take out a loan.

What they are saying: “The U.S. economy will eventually fall into recession, maybe as soon as next year, but the December employment report indicates that this isn’t going to happen anytime soon,” said David Berson, chief economist at Nationwide Insurance.  “Today’s all around strong jobs report confirms that the economy ended 2018 on a strong note and came as a timely reminder that fundamentals remain solid,” wrote economists Lydia Boussour and Gregory Daco at Oxford Economics

Market reaction: The Dow Jones Industrial Average DJIA, +3.29% and S&P 500 SPX, +3.43% surged in Friday trades after a big loss on Thursday triggered by fresh worries about an economic slowdown.

The 10-year Treasury yield TMUBMUSD10Y, +0.00% stood at 2.66%. Yields have tumbled from a seven-year high of 3.23% in October.

Source: The,

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