Upbeat employment report underscores U.S. economic strength Lucia Mutikani
https://www.reuters.com/article/us-usa-economy/upbeat-employment-report-underscores-us-economic-strength-idUSKCN1OY0AU
WASHINGTON (Reuters) – U.S. 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 U.S. economy heightened 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 surged by 312,000 jobs last month, the largest gain since February, as employment at construction and leisure and hospitality locations snapped back after being restrained by unseasonably cold temperatures in November.
Job gains were reported across all industries, with the exception of the information sector, which shed employment for the second straight 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, which was the largest in 9-1/2 years.
Wages advanced 3.1 percent on a year-on-year basis in November. Employers increased hours for workers, pushing the average workweek up to 34.5 hours from 34.4 hours 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 labor market pulled some 419,00 jobless Americans from the sidelines. Fewer workers worked part-time for economic reasons in December.
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 rates 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.
Speaking at an American Economic Association event with former Fed chiefs Janet Yellen and Ben Bernanke on Friday, Powell sought to placate jittery financial markets. Powell said the U.S. central bank was “always prepared to shift the stance of policy and to shift it significantly” if necessary. He also said he would not resign if Trump asked him to so.
The Fed raised rates four times in 2018. The central bank 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.
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