U.S. employers surpass hiring expectations in December
U.S. employers went on a hiring spree in December, adding a surprising 312,000 jobs and providing a dose of reassurance about the economy after a turbulent few months on Wall Street.
The job gains reported Friday by the Labour Department came despite a trade war with China, a global slowdown and a partial U.S. government shutdown now entering its third week.
The nation’s unemployment rate rose slightly to 3.9 per cent last month, but that, too, was considered a positive sign, reflecting an increase in Americans beginning to look for work. Average hourly pay improved 3.2 per cent from a year ago.
Stocks surged on the news, along with word that the United States and China plan to hold trade talks next week and comments from Federal Reserve chair Jerome Powell that the Fed will be flexible in judging whether to raise interest rates further.
The Dow Jones industrial average recorded a gain of 746.94 points at the close of trading on Friday, an increase of 3.29 per cent. President Donald Trump called the job growth “GREAT” on Twitter.
The torrid hiring in December far outstripped the 180,000 jobs that investors had been anticipating and could help ease fears that the economy’s expansion — now in the middle of its 10th year — may be coming to an end.
“The labour market is very strong, even though the economy appears to be slowing,” said Eric Winograd, senior U.S. economist at the investment management firm AllianceBernstein. “Those two things cannot coexist for very long. Either weakening demand will lead firms to dial back the pace of hiring or the robust pace of hiring will lead firms to ramp back up production.”
In recent weeks, financial markets have plunged amid concerns that the U.S. could be in a recession by 2020. The Dow suffered its worst December since the middle of the Depression in 1931.
Major companies such as Apple say their sales are being jeopardized by the tariff war between Washington and Beijing, and an important gauge of U.S. manufacturing posted its steepest decline in a decade Thursday.
China, the world’s second-largest economy, is also mired in a slowdown, its consumers losing much of their appetite for real estate, iPhones, Ford vehicles and jewelry from Tiffany & Co.
The U.S. government shutdown and Trump’s attacks on the Fed and its chair over the central bank’s rate increases have also worried investors, though Powell may have eased some of those concerns Friday when he stressed that he would not resign if the president told him to do so.
The strong job growth suggests employers believe U.S. consumer spending will stay robust.
Health care and education added 82,000 jobs last month, the largest jump in nearly nine years. Restaurants and drinking places posted a net gain of 40,700 jobs. Builders added 38,000 construction jobs, while manufacturers increased their payrolls by 32,000 workers.
But Kevin Hassett, chair of the White House’s Council of Economic Advisers, cautioned on Thursday that the jobs report for January could be weak if the shutdown continues. Job totals could be lowered by hundreds of thousands of government employees being temporarily put out of work.
“So when we see the January jobs number, it could be a big negative,” Hassett said.
In 2018, employers added 2.6 million jobs, or an average of nearly 220,000 a month, the Labour Department said.