Private-sector payrolls increased by a seasonally adjusted 168,000 in December, the Labor Department reports. That’s a bit shy of my average econometric forecast that was published yesterday, and considerably lower than the ADP estimate of last month’s rise in payrolls. Nonetheless, today’s jobs report reflects a modest pace of growth that provides another encouraging data point for expecting that the full December economic profile will show an economy that continues to expand.

The labor market grew last month in all the major goods-producing categories and across most of the services sector. The main exception: retail trade, which shed 11,000 jobs, a sharp retreat from November’s 63,000 gain. Looking beyond the monthly data, however, suggests that the pace of private-sector jobs creation remained on a modest-growth track through the end of 2012. Private-sector payrolls increased 1.7% in December vs. a year earlier, or in line with the annual growth rate that’s prevailed since last spring.

The labor market, in sum, continues to grow modestly, as it has for most of the past year. Despite the uncertainty linked to the fiscal cliff debates in Washington last month, jobs growth rolled on. Perhaps the number of new positions would have been higher if the Beltway crowd wasn’t so dysfunctional in managing the nation’s budget. In any case, there are no obvious signs of doom in today’s jobs report in terms of evaluating the business cycle.
“The labor market continues to recover,” Brian Jones, a senior U.S. economist at Societe Generale, tells Bloomberg. “The pace of hiring is respectable, and the unemployment rate will gradually keep coming down. With the fiscal cliff having been averted, this should be good for job growth. The labor market will continue to make progress this year.”
Today’s jobs report is hardly a blow-out performance, but it’s strong enough to support Jones’ outlook. Surprised? You shouldn’t be. A broad review of economic and financial indicators has been dropping clues all along that the economy is in no imminent danger of slipping into a new recession. Yes, growth is subpar relative to economic history, but it’s sufficiently strong to keep the US out of the macro ditch. That’s shocking news for some bearish analysts, but it seems that they’ve forgotten Yogi Berra’s advice: “You can observe a lot just by watching.”