USA employment surges in December

Roman Schwartz
January 8, 2019

Citing rising interest rates that are beginning to impact the housing market, manufacturing surveys from Federal Reserve banks in Dallas, Philadelphia, and NY that were less than expected, and fears from stock market investors that the Federal Reserve may continue to push for interest rate increases to ward off inflation, some economists believe these factors could combine to lead the USA economy into a tough situation.

The unemployment rate rose by 0.2 percentage point to 3.9 per cent in December, but that was due to more workers joining the job hunt, the report said. And average hourly pay improved 3.2 percent from a year ago.

The jolt in hiring offered a dose of reassurance after a tumultuous few months on the financial markets. Furthermore, this growth was consistently strong throughout the year; the economy has added over 100,000 jobs every month in 2018, just the second time since 2000 that this has occurred for a full calendar year.

We'll talk about what that does (and doesn't) tell us about the economy and recap a very volatile week for markets. "Those two things can not coexist for very long".

Stocks jumped Friday in response to the jobs figures.

The Dow Jones industrial average was up roughly 700 points in the afternoon, an increase of about 3 percent.

The report beat expectations, and bringing down recession fears amid recent market volatility.

The S&P 500 index suffered its worst December since the Great Depression and tumbled on Thursday after Apple Inc AAPL.O slashed its holiday-quarter revenue forecast, saying sales in China slowed more than expected.

The main USA share indexes, which had tumbled on Thursday, also opened higher.

The U.S. government is about to enter its third week of a partial shutdown, with negotiations stalled over Trump's insistence that Democrats agree on funding for a border wall.

The ongoing trade dispute with china has has had an effect on U.S. And global markets and investors have been wary of the Federal Reserve's plan for more interest rate hikes. Still, it may be hard to replicate such labor-market strength in 2019 amid the U.S. Manufacturing has been a bright spot since President Trump's election, and now averages 20,000 new jobs per month compared to 8,000 per month in the four years prior.

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There could be hundreds of thousands of government workers who could say they're not working, which would lower the job totals. The lingering problem, however, is that U.S. workers haven't seen their paychecks get much bigger.

As is usually the case, growth during the month was led by the service sector, which added 227,000 workers to payrolls during the months led by big gains in health care, education, and professional services. Instead, the market saw a substantial addition of jobs in December. Restaurants and drinking places posted a net gain of 40,700 jobs.

Manufacturing also tuned in a solid 32,000 gain for the month, with the bulk of the growth coming from the 19,000 positions added in the key durable goods sector.

For "hard hat" workers excluding supervisory personnel, the latest year-over-year compensation boosts were even more robust, +4.2% hourly and +4.5% weekly.

Fresh Coat Painters, based in Cincinnati, plans to almost double the 300 employees who paint homes and businesses as it expands this year across this country.

"We're seeing two different economic realities right now", said Martha Gimbel, research director for the Hiring Lab at Indeed, an employment website.

Health care and education added 82,000 jobs last month, the largest jump in almost nine years.

Hiring has easily eclipsed that pace.

The U.S. economy added more than 300,000 new jobs in the final month of 2018, the U.S. Bureau of Labor Statistics said in its jobs report Friday. The strong wage gain makes a policy change unlikely. Record low unemployment rates were also achieved this year for African Americans (5.9 percent in May), Asians (2.2 percent in May), and individuals with less than a high school degree (5.0 percent in July).

The slightly higher jobless rate shouldn't ring alarm bells, said Joseph Brusuelas, chief economist at RSM, an global consulting firm.

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