December Jobs Report: 312,000 Jobs Added, Unemployment Slightly Rises

Bank economists expect US employment data to slow down - Bloomberg

The markets have been turbulent amid concerns that the USA economy will be hurt by weakness in other countries.

Nonfarm payrolls surged by 312,000 jobs last month, the largest gain since February, as employment at construction and leisure and hospitality locations snapped back after being restrained by unseasonably cold temperatures in November.

Concerns about the USA economy heightened following surveys showing sharp declines in consumer confidence and manufacturing activity last month, which roiled financial markets.

The labor market, however, is unlikely to perform as well this year.

Private analysts had projected that jobs would grow by about 180,000 and that unemployment would stay at November's rate of 3.7 percent. That would amount to 1.87 million for 2019, less than the 2.27 million added in the first 11 months of 2018. Median estimates from the Bloomberg polling suggest the USA added 184 thousand jobs for December, an improvement over November's 155 thousand addition, but still below the year's average of 206 thousand.

Job-gain estimates in Bloomberg survey range from 160,000 to 225,000.

The unemployment rate rose from 3.7 percent to 3.9 percent because more people were looking for jobs in December. "However, risks to the outlook have escalated lately and an expected moderation in economic growth will likely coincide with a less-robust pace of job creation as this year progresses". Employers increased hours for workers, pushing the average workweek up to 34.5 hours from 34.4 hours in November. Fewer workers worked part-time for economic reasons in December.

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"It appears that higher wages are the reason why people are returning to the active labor force in large numbers", said Paul Ashworth, chief US Economist with Capital Economics.

Despite the increase in the unemployment rate, the influx of people searching for work coupled with the job gains is an indication that the rate should decline in the coming months. The strong wage gain makes a policy change unlikely. The central bank last month forecast two rate hikes this year and signaled its tightening cycle is nearing an end in the face of financial market volatility and slowing global growth.

United States financial markets are projecting no rate hikes in 2019.

Hiring last month was likely across all sectors.

"This should, at least for today, mute expectations that the Fed is off the table completely this year", said Omair Sharif, a senior economist at Societe Generale in NY.

Speaking at an American Economic Association event with former Fed chiefs Janet Yellen and Ben Bernanke on Friday, Powell sought to placate jittery financial markets. Continuing claims, which are reported with a one-week lag, rose to the highest since late July.

More broadly, the US labor market is extraordinarily tight, leaving businesses reluctant to let workers go. A strong holiday shopping season is expected to have boosted retail employment while transportation and warehousing payrolls probably rose, driven by seasonal hiring. Manufacturing payrolls are forecast to have increased by 20,000 jobs in December, but could surprise on the downside after a measure of factory employment fell last month.

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