US employers hired the most workers in 10 months in December while boosting wages, pointing to sustained strength in the economy that could ease fears of a sharp slowdown in growth.
The upbeat employment report from the Labour Department on Friday stood in stark contrast with reports this week showing Chinese factory activity contracting for the first time in 19 months in December and weak manufacturing across much of Europe.
Concerns about the US economy heightened following surveys showing sharp declines in consumer confidence and manufacturing activity last month, which roiled financial markets. Both were seen as more red flags that the economic expansion, now in its ninth year and the second longest on record, is losing steam.
"The jump in payrolls in December would seem to make a mockery of market fears of an impending recession," said Paul Ashworth, chief economist at Capital Economics in Toronto. 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.
Job gains were reported across all industries, with the exception of the information sector, which shed employment for the second straight month. Data for October and November were revised to show 58,000 more jobs added than previously reported.
The economy created 2.6 million jobs last year compared to 2.2 million in 2017. Average hourly earnings rose 11 cents, or 0.4 percent, in December after gaining 0.2 percent in November. That lifted the annual increase in wages to 3.2 percent, matching October's rise, which was the largest in 9-1/2 years.
Wages advanced 3.1 percent on a year-on-year basis in November. Employers increased hours for workers, pushing the average workweek up to 34.5 hours from 34.4 hours in November. The unemployment rate increased to 3.9 percent from near a 49-year low of 3.7 percent in November as a strong labour market pulled some 419,00 jobless Americans from the sidelines. Fewer workers worked part-time for economic reasons in December.
The labour force participation rate, or the proportion of working-age Americans who have a job or are looking for one, rose two-tenths of a percentage point to 63.1 percent, the highest level since September 2017. The December jobs gain pushed total US employment above 150 million jobs for the first time. The Labour 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 Labour Statistics.
Data releases from Census Bureau and Bureau of Economic Analysis have been suspended during the shutdown, which started on Dec. 22 amid demands by Trump for $5 billion in funding for a wall on the US-Mexico border. The robust labour market, especially strengthening wage growth, suggests the economy will continue to expand this year despite the ebb in consumer confidence, continued weakness in the housing market and cooling manufacturing activity.
Growth forecasts for the fourth quarter are around a 2.6 percent annualized rate, with risks tilted to the downside amid the fading stimulus from the Trump administration's $1.5 trillion tax cut package, a trade war with China and policy uncertainty in Washington.
The economy grew at a 3.4 percent pace in the third quarter. It needs to create roughly 100,000 jobs per month to keep up with growth in the working-age population. Job growth averaged 220,000 per month in 2018. It is expected to slow to around 150,000 per month this year as workers become more scarce.
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.
Employment at construction sites rebounded last month, with companies hiring 38,000 employees after adding no workers in November. Manufacturing payrolls rose by 32,000 jobs in December. Retailers hired 23,800 more workers.
Professional and business services employment increased by 43,000 jobs last month and government payrolls rose 11,000. Employment in the leisure and hospitality sector increased by 55,000 jobs. The health and education sector added 82,000 positions.
Comments
Comments are closed.