December jobs report: 312,000 jobs added in December

08 January, 2019, 03:39 | Author: Brooke Harris
  • US jobs growth jumps in December

Providing the latest snapshot of the USA economy, the Labour Department's December employment report out Friday will likely show hiring and wages picked up at the end of 2018.

A strong employment report could offer some relief to global markets, which have reeled in recent months from a flood of concerns including slowing economic growth.

"A substantial surprise in the jobs number, either higher or lower, would likely elicit a significant market reaction", economist Veronica Clark said in a note.

"The ADP employment report has been susceptible to large swings in December that we think may be in part due to a year-end quirk that has tended to result in ADP printing high relative to payrolls in the final month of the year", said John Ryding, chief economist at RDQ Economics in NY.

Businesses hired a stunning 312,000 workers in December, capping off a year of robust economic growth, the Labor Department said Friday. There were also broad gains in hiring last month.

U.S. job growth likely picked up in December with wages expected to have increased solidly, which could help to allay a recent upsurge in fears about the economy's health that have roiled financial markets. Average hourly pay was up 3.2% compared to a year earlier. That lifted the annual increase in wages to 3.2 percent, matching October's gain, from 3.1 percent in November. The average work week rose 0.1 hour to 34.5 hours.

The unemployment rate rose from 3.7 percent to 3.9 percent because more people were looking for jobs in December. Fewer workers worked part-time for economic reasons in December. The unemployment rate among people eligible for benefits was unchanged at 1.2 percent.

The strong employment report likely keeps the Federal Reserve on course to continue raising interest rate this year, deepening its rift with Wall Street and Trump, who has chastised the Fed and its chairman, Jerome Powell, repeatedly for the rate increases.

"The claims data suggest that conditions in the labor market have softened relative to a few months ago when the claims readings were very upbeat, but the extent of any deterioration is not entirely obvious and does not look extreme at this point", said Daniel Silver, an economist at JPMorgan in NY. Powell said the US central bank was "always prepared to shift the stance of policy and to shift it significantly" if necessary.

The U.S. central bank raised rates four times in 2018. "An upside surprise could increase market expectations for rate hikes in 2019, while a downside surprise could lead markets to price a higher probability that exceptional US growth is not immune from declining equity prices and slowing global growth".

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The U.S. government shutdown and Trump's attacks on the Fed and its chairman over the central bank's rate increases have also anxious investors, though Powell may have eased some of those concerns Friday when he stressed that he would not resign if the president told him to do so.

The ripple effects from slower growth overseas could eventually hurt the USA economy, David Dollar, a senior fellow at the Brookings Institution, told NPR's Scott Horsley. Last week included Christmas and preceded New Year's Day.

The December jobs gain pushed total USA employment above 150 million jobs for the first time.

The Labor Department has not been affected by the partial shutdown of the US government and will continue to publish economic data complied by its statistics agency, the Bureau of Labor Statistics.

The government is about to enter its third week of a partial shutdown, with negotiations stalled over President Donald Trump's insistence that Democrats agree on funding for a wall along the border with Mexico. The latest monthly jobs shows that the economic weakness causing stock markets to drop isn't yet visible in the employment figures. Job growth averaged 220,000 per month in 2018.

But the expected continuation of steady job growth suggests that such risks might be - for the moment, anyway - overblown. Anecdotal evidence has been growing of companies experiencing difficulties finding workers, and raising wages to retain and attract employees. The government shutdown, if it extends beyond next week, could weigh on January payrolls.

A large portion of the growth occurred in health care, construction, food services, retail trade and manufacturing. The ISM manufacturing index fell 5.2 percentage points in December and an index measuring new orders tumbled 11 percentage points.

More broadly, the US labor market is extraordinarily tight, leaving businesses reluctant to let workers go.

Barclays - 185,000 jobs, 3.6 percent unemployment, 3 percent annual wage gain.

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