Dec 13, 2018
U.S. jobs and wages rose by less than forecast in November while the unemployment rate held at the lowest in almost five decades, indicating some moderation in a still-healthy labor market.
Nonfarm payrolls increased by 155,000 after a downwardly revised 237,000 gain in the prior month, a Labor Department report showed Friday. The median estimate in a Bloomberg survey called for an increase of 198,000. Average hourly earnings rose 0.2 percent from the prior month, compared with forecasts for 0.3 percent, though wages matched projections on an annual basis, up 3.1 percent for a second month.Treasury yields initially dipped and the dollar declined as the report added to signs that economic growth is cooling a bit, following weakness in business-equipment orders and an ebbing of consumer optimism. While the data may spur more concern over the outlook after stocks and bond yields tumbled this week, some investors may see the prospect of a slower pace of Federal Reserve interest-rate increases as a positive following an expected hike this month, as equity futures rose following the jobs data.
“It’s not like 155,000 is a terrible number, but it’s below what
people were looking for,” said Michael Feroli, chief U.S. economist
at JPMorgan Chase & Co. After an unusually strong two quarters for
the economy, “we’re looking for growth to step down this quarter
and you should probably also expect to see the labor market cool
off some. It’s consistent with the economy coming off what people
call a sugar rush.”For the Fed’s interest-rate hikes, “December is
pretty close to a done deal,” Feroli said. “For next year, it
depends what the data looks like the next couple of months. It
doesn’t feel like things are softening in an alarming way. If it’s
really soft, they’ll take a break.”The jobless rate was unchanged
at 3.7 percent in November, matching estimates. Fed Chairman Jerome
Powell said late Thursday that the U.S. labor market is “very
strong” by many measures and that the economy is “performing very
well overall.”Even so, one key risk is the trade war between the
U.S. and China, the world’s two largest economies. While the
nations agreed last weekend on a 90-day pause for new tariffs, the
accumulated levies and developments have created uncertainty for
companies and may weigh on the employment outlook.
Retailers showed solid demand for workers overall, hiring 18,200 people in the month before Christmas; general-merchandise stores added the most employees while clothing and electronics stores cut workers. Transportation and warehousing, a category closely linked to retail, also saw gains of 25,400 in the month. Construction jobs rose by 5,000, the weakest since a decline in March, as gains cooled among residential specialty trade contractors. Manufacturing remained strong at an increase of 27,000.
The monthly gain in average hourly earnings for all private workers followed a downwardly revised 0.1 percent increase, the report showed. The annual increase topped 3 percent for a second month, reflecting how companies are steadily raising pay to attract and retain workers as the availability of workers tightens.