Published: Mon, January 07, 2019
Markets | By Otis Pena

312,000 jobs added in December; unemployment inches higher

312,000 jobs added in December; unemployment inches higher

Concerns about the economy had been boosted by surveys showing sharp declines in consumer confidence and manufacturing activity last month. 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.

But futures soon recovered to levels they were at earlier in on Friday, after China and the United States planned for a fresh round of trade talks on January 7-8 to try and resolve their dispute. The side effect was that the unemployment rate moved up to 3.9% from 3.7% in November.

The jolt in hiring offers a dose of reassurance after a tumultuous few months as the outlook from the financial markets has turned decidedly bleaker.

The economy added 312,000 jobs in December, the report said. For the past year, the American economy was averaging about 209,000 new jobs each month. Average hourly earnings grew 3.2 percent over the past 12 months - topping the 3.1 percent increase 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. While that may sound ominous to some, economists stated this was due simply to more people entering the work force to seek employment.

The large month-to-month gain in jobs in December understates the overall improvement, since there was also a substantial positive revision to prior data. "This jobs report will signal to the Federal Reserve that continued monetary tightening is appropriate, and that the USA labor market remains a bright spot in an otherwise troubled economic environment".

The dollar surged, USA stock futures remained higher and Treasuries tumbled following the report.

The reminder that while Wall Street may be ailing the real economy is chugging along was sure to delight Trump.

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The Fed raised rates four times in 2018. "Eventually, job growth is going to start slowing down".

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

Growth forecasts for the fourth quarter are around a 2.6 percent annualised 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. "Expectations regarding job prospects and business conditions weakened, but still suggest that the economy will continue expanding at a solid pace in the short-term", said Lynn Franco, a senior director at the Conference Board.

For two of the last three months, the unemployment rate had been 3.7%, its lowest level in 50 years.

The big unknown is the partial federal government shutdown.

The construction sector also delivered some bountiful pay increases in the latest month.

The Dow Jones industrial average climbed roughly 700 points in early afternoon trading, an increase of about 3 percent. Hicks says part of the job gains were especially strong in seasonal sectors such as retail, however manufacturing also added 32,000 jobs. During the first 11 months of 2018, employers added 2.27 million jobs, or an average of 206,182 a month, according to the Labor Department.

Health care and education, which combines everything from outpatient care and social assistance to teachers and professors, posted a net gain of 82,000 jobs.

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