WASHINGTON- US job growth slowed in December after surging in the prior month, but the pace of hiring is enough to keep the longest economic expansion in history on track despite a deepening downturn in a manufacturing sector stung by trade disputes.
The Labor Department’s closely watched monthly employment report on Friday also showed the jobless rate holding near a 50-year low of 3.5 percent. A broader measure of unemployment dropped to a record low last month, but wage gains ebbed. The mixed report will probably not change the Federal Reserve’s assessment that both the economy and monetary policy are in a “good place.”
“The report suggests a moderate pace of economic growth,” said Michael Feroli, an economist at JPMorgan in New York. “The Fed is comfortably on hold.”
Nonfarm payrolls increased by 145,000 jobs last month, with manufacturing shedding jobs after being boosted in November by the return to work of about 46,000 production workers at General Motors GM.N after a strike, the government’s survey of establishments showed.
That was the smallest gain since May.
But milder-than-normal temperatures in December boosted hiring at construction sites, and employment at retailers surged last month. Some of the slowdown in overall job growth in December is likely due to seasonal volatility associated with a later-than-normal Thanksgiving Day. Economists polled by Reuters had forecast payrolls rising by 164,000 jobs in December.
“Today’s data also falls in line with a series of job growth decelerations that we’ve traditionally seen in years with calendar set-ups that involve a late Thanksgiving Day holiday, which often can lead to flattering November payroll data at the expense of December,” said Rick Rieder, global fixed income chief at BlackRock in New York.
Roughly 100,000 jobs per month are needed to keep up with growth in the working-age population. The economy added 14,000 fewer jobs in October and November than previously reported.
The final employment report of the decade showed the economy created 2.1 million jobs in 2019, the least since 2011 and down from 2.7 million in 2018.
Reports on housing, trade and consumer spending have suggested that the economic expansion, now in its 11th year, is not in immediate danger of being derailed by a recession. Worries that a downturn might be triggered by the Trump administration’s 18-month-long trade war with China spurred the Fed to cut interest rates three times in 2019.
Indeed economic growth did slow last year, throttling back to 2.1 percent in the third quarter from 2018’s brisk pace of nearly 3 percent. Now, though, with a Phase 1 deal with China set to be signed next week, policymakers are more confident in the outlook and last month signaled borrowing costs could remain unchanged at least through this year.
Economists are pegging growth at the end of last year around a 2.3 percent rate.
The dollar was little changed against a basket of currencies, while US Treasury prices rose. Stocks on Wall Street were mixed.
The labor market has continued to churn out jobs at a healthy clip, despite anecdotal evidence of worker shortages, which economists had feared would significantly restrain hiring. But with the labor market tightening further, economists believe the long-awaited slowdown in job growth will happen this year. — Reuters