Robust employment report underscores US economic strength

0
68

WASHINGTON: 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 Labor 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 rose 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.” “This employment report suggests the U.S. economy still has considerable forward momentum.”

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

There were also broad gains in hiring last 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, from 3.1 percent in November. The average workweek increased to 34.5 hours in December from 34.4 hours in November.

The unemployment rate increased to 3.9 percent from a near 49-year low of 3.7 percent in November as a strong labor market pulled some 419,00 jobless Americans from the sidelines.

The labor 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 strong employment report likely keeps the Federal Reserve on course to continue raising interest rate this year, deepening its rift with Wall Street and President Donald Trump, who has chastised the Fed and its chairman, Jerome Powell, repeatedly for the rate increases. Powell is due to appear on a panel with his two predecessors about two hours after the report’s release.

The US central bank raised rates four times in 2018. The Fed 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.

U.S financial markets are projecting no rate hikes in 2019. In the latest signal that investors see little room for the Fed to lift rates any further, yields on 2-year US Treasury notes on Thursday dropped below the Fed’s policy rate for the first time in more than a decade.

US stock index futures initially pared gains after the employment report on Friday before recovering to earlier levels, while US Treasury yields rose. The US dollar turned positive against a basket of currencies.

“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 New York.

LEAVE A REPLY

Please enter your comment!
Please enter your name here