Robust 2006 ends on a good note

It has turned out to be the proverbial “icing on the cake”. 2006, the year in which U.S unemployment rate averaged a six-year low of 4.6 percent and the percentage of the total American population holding jobs rose to 63.4 percent, the highest level in more than five years, ended on a positive note. Employers boosted hiring and doled out hefty workers' paychecks in December.

The last month of the year saw businesses in the United States adding more workers to their payrolls than most economists expected. In absolute terms, employers added 167,000 new jobs to their payrolls in December. The pay of the workers rose at a hefty clip suggesting that suggested that most businesses did well inspite of the real-estate bust that caused the economy to lose momentum last year.

On a sectoral basis, the services sector of the economy showed considerable strength. Architectural and engineering organizations, hospitals, banks, software firms, schools and hospitality industry increased jobs. However, the housing industry barely added any jobs in December, after cutting jobs in October and November. There was downsizing in the auto industry as well.

Lynn Reaser, chief economist at Bank of America's Investment Strategies Group said, "The economy seems to be weathering the storm clouds in the auto and housing industries. Employers are putting out the hiring signs, though they are not being overly aggressive and workers are earning more money."

In total, the economy added 1.8 million jobs, or an average of 153,000 a month in 2006. During 2006, wages grew by a strong 4.2 percent, an all time high in six years. Workers, many of whom had been bogged down by inflation, saw their average hourly earnings jump to $17.04 in December, a 0.5 percent rise from November. Wages are now growing faster than prices, leaving people with more money to spend.

The increase in the personal disposable income is a big force propelling overall economic activity. However, the same can stoke concerns about inflation also. Federal Reserve Chairman Ben Bernanke said that the central bank will keep a close watch for any signs that wage growth might be spurr an undesirable increase in inflation.