‘We expected a strong payroll number…but this is spectacular…’
(AFP) U.S. job creation rocketed higher last month, a jolt of unexpected good news for President Donald Trump as his economic agenda comes under increasing strain.
The blockbuster US jobs numbers starkly contrasted with the mounting fears for the global economy of recent weeks — which have seen stock prices tumble and confidence wane among corporations who foresee slowing demand and weakening sales in 2019.
Employers added a whopping 312,000 positions for the month, smashing economists’ expectations, and wages rose steadily, gaining 3.2 percent for the year.
The unemployment rate ticked up by two tenths of a point to 3.9 percent, but that was due mostly to more workers joining the job hunt, according to the closely-watched report.
And net job gains in October and November were revised up a combined 58,000, the Labor Department said.
The reminder that while Wall Street may be ailing the real economy is chugging along was sure to delight Trump.
Rising interest rates?
However, the added evidence of an economy at full employment could add to the case for the Federal Reserve to continue to raise interest rates this year, something Trump has aggressively and publicly complained about.
Forecasts from Fed officials last month indicated they expect just two rate hikes in 2019 amid signs of weakness, rather than three.
Jim O’Sullivan of High Frequency Economics said “the unemployment rate is already low enough to put upward pressure on labor costs.”
“The recent turmoil in markets is raising the likelihood of some slowing ahead, although these data provide a reminder of how strong the trend has been before whatever slowing occurs,” he said.
Federal Reserve Chairman Jerome Powell will have a chance to address the economy and the central bank’s thinking when he speaks at an event with his two predecessors later in the morning.
Trump faces protracted political battles in 2019 and the danger the view of his stewardship of the economy will be undercut amid a government shutdown and a stinging trade war with China.
Job creation in 2018 rose to a monthly average of 220,000 positions, far higher than the 182,000 recorded in 2017 but lower than 2014 and 2015.
Hiring jumped in healthcare, bars and restaurants, construction and, notably, in manufacturing, especially for durable goods, fabricated metal products and computers and electronics — all sectors that complain of lower profits and lost sales due to global trade tensions.
The December report also suggested there was rising hope among job seekers.
The labor force participation rate — a measure of the total supply of employed people and those available and searching for work — rose to its highest level since September 2017 at 63.1 percent of the working-age population.
The 3.2 percent wage gains over December of 2017 also meant workers saw increased purchasing power as consumer inflation over the same period was a slower 2.2 percent.
The sudden jump in hiring could be explained by weather effects as much of the nation had seen unusually cold temperatures during the November survey while December’s survey week had been unseasonably warm.
“We expected a strong payroll number after the distortions of recent months due to two hurricanes, the California fires and the very cold November survey week, but this is spectacular,” economist Ian Shepherdson of Pantheon Macroeconomics said.
He cautioned that “this pace can’t be sustained.”
© Agence France-Presse