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

U.S. job gains seen picking up, may soothe jittery markets

U.S. job gains seen picking up, may soothe jittery markets

The torrid hiring in December far outstripped the 180,000 jobs investors had been anticipating and could help ease fears that the economy's expansion - now in the middle of its 10th year - may be coming to an end.

Nonfarm payrolls probably increased by 177,000 jobs last month, according to a Reuters survey of economists, after rising 155,000 in November. A reading above 50 in the ISM index indicates an expansion in manufacturing, which accounts for about 12 percent of the USA economy.

But in recent weeks, financial markets have been increasingly anxious about the path of economic growth this year. That would amount to 1.87 million for 2019, less than the 2.27 million added in the first 11 months of 2018. Following modest gains of 0.2% in November, economists estimate average hourly earnings rose 0.3% last month.

The Labor Department says the unemployment rate rose slightly to 3.9 percent, but that reflected a surge in jobseekers- a positive for growth. "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". This franchiser is also launching an apprenticeship program to attract workers, in addition to providing higher pay and benefits.

"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.

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Jobless claims increased to 231,000 in the week ended December 29, above the 220,000 median estimate of economists, Labor Department figures showed Thursday. The Dow suffered its worst December decline since the middle of the Great Depression in 1931 as surveys of economists and business leaders suggested the United States could be in a recession by 2020.

165,000 jobs, 3.7 percent unemployment, 3 percent annual wage growth.

Job gains were widespread, with construction, manufacturing, health care and leisure and hospitality all posting gains of more than 30,000 jobs.

Barring a big miss relative to estimates or major revisions to prior months' data, the December jobs gain is likely to push total U.S. employment above 150 million jobs for the first time. Still, growth is likely to slow as the stimulus from last year's tax cuts wane. "An upside surprise could increase market expectations for rate hikes in 2019, while a downside surprise could lead markets to price a higher probability that exceptional US growth is not immune from declining equity prices and slowing global growth". Last week included Christmas and preceded New Year's Day. Manufacturing payrolls rose by 32,000 jobs in December. The dollar dropped against a basket of currencies, while U.S. Treasury yields fell. The ADP report, which is jointly developed with Moody's Analytics, was published ahead of the government's more comprehensive employment report for December scheduled for release on Friday.

Businesses are still searching for more workers. Retail employment increased by 23,800 jobs. The ADP National Employment Report on Thursday showed private payrolls jumped 271,000 last month after increasing 157,000 in November.

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