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Job growth surges, unemployment ticks up. Why?

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Nancy Pelosi Hoyer Perez

There were 6.3 million people looking for a job in December, down from 6.5 million a year ago.

Employers added 312,000 jobs to the USA economy in December - almost double the 178,000 new positions economists had expected, according to the latest jobs report from the Bureau of Labor Statistics.

The BLS said average hourly earnings increased in December by 11 cents, to $27.48 per hour - up 3.2 percent to a new nine-year high. The rally kicked into high gear and the Dow Jones Industrial Average ended with a posting a 3.3 per cent gain, also helped by Federal Reserve Chairman Jerome Powell who said the U.S. central bank would be "patient" in deciding on any further increases in the benchmark lending rates.

The unemployment rate increased to 3.9 percent from near a 49-year low of 3.7 percent in November as a strong labour market pulled some 419,00 jobless Americans from the sidelines. However, the stock market will have to weigh whether the strong job growth will lead the Fed to raises rates even more than anticipated.

The ripple effects from slower growth overseas could eventually hurt the USA economy, David Dollar, a senior fellow at the Brookings Institution, told NPR's Scott Horsley. He added that the report "suggests the USA economy still has considerable forward momentum".

Job gains occurred in health care, food services and drinking places, construction, manufacturing, and retail, the bureau report said.

Restaurants and bars added 41,000 to the close the year with a 235,000 gain, down from 261,000 in 2017.

Overall, however, 2018 was a year that shifted more power to workers, said Josh Wright, chief economist at iCIMS, a hiring software firm.

Nonfarm payrolls increased by 312,000 jobs last month, the largest gain since February, as employment at construction sites snapped back after being restrained by unseasonably cold temperatures in November.

The U.S. central bank raised rates four times in 2018.

The roughly 380,000 federal workers who were furloughed in December were not included in the report because the government shutdown started after the data was collected. This is one of the most important - and underappreciated - labor market developments in recent years that explains the stronger-than-expected job growth and moderate wage growth numbers.

Wages grew 3.2 percent in the year since December 2017 after almost a decade of tepid growth, the Labor Department's latest numbers showed. In the latest signal that investors see little room for the Fed to lift rates any further, yields on 2-year U.S. Treasury notes on Thursday dropped below the Fed's policy rate for the first time in more than a decade. The comparable increases across the whole economy, both hourly and weekly, were +3.2%. Anecdotal evidence has been growing of companies experiencing difficulties finding workers, and raising wages to retain and attract employees.

Manufacturing added 32,000 jobs in December, including more than 19,000 jobs in durable goods and more than 7,000 in fabricated metal products.

By industry sector, the largest revisions to November's jobs statistics came from "retail" (+18,000), "government" (+16,000) and "leisure and hospitality" (+14,000).

Businesses are still searching for more workers. Education added 24,000 jobs.

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