US job growth cools in Novem­ber, monthly wage gains mod­est

Daily Sabah (Turkey) - - Money -

U.S. job growth slowed in Novem­ber and monthly wages in­creased less than ex­pected, sug­gest­ing some mod­er­a­tion in eco­nomic ac­tiv­ity that could sup­port ex­pec­ta­tions of fewer in­ter­est rate in­creases from the Fed­eral Re­serve in 2019.

The La­bor Depart­ment’s closely watched monthly em­ploy­ment re­port on Fri­day came against a back­drop of a steep sell-off on Wall Street and a par­tial in­ver­sion of the U.S. yield curve, which have stoked fears of a re­ces­sion.

“This is still a solid gain that sug­gests eco­nomic growth is grad­u­ally slow­ing back to­wards its po­ten­tial pace,” said Paul Ash­worth, chief econ­o­mist at Cap­i­tal Eco­nomics in Toronto. “There is noth­ing here to sug­gest the econ­omy is suf­fer­ing a more sud­den down­turn.”

Non­farm pay­rolls in­creased by 155,000 jobs last month, with con­struc­tion com­pa­nies hir­ing the fewest work­ers in eight months, likely be­cause of un­sea­son­ably chilly tem­per­a­tures.

Some of the mod­er­a­tion in hir­ing in Novem­ber could be the re­sult of a short­age of qual­i­fied work­ers. But it also fits in with other data show­ing a rise in lay­offs in re­cent weeks and a de­cline in a mea­sure of ser­vices sec­tor em­ploy­ment in Novem­ber.

Data for Septem­ber and Oc­to­ber were re­vised to show 12,000 fewer jobs added than pre­vi­ously re­ported. Economists polled by Reuters had fore­cast pay­rolls in­creas­ing by 200,000 jobs in Novem­ber. The un­em­ploy­ment rate was un­changed at near a 49-year low of 3.7 per­cent as more peo­ple en­tered the la­bor force.

Av­er­age hourly earn­ings rose six cents, or 0.2 per­cent in Novem­ber. Oc­to­ber wage gains were re­vised down to 0.1 per­cent from the pre­vi­ously re­ported 0.2 per­cent. In the 12 months through Novem­ber, wages in­creased 3.1 per­cent, match­ing Oc­to­ber’s jump, which was the big­gest gain since April 2009.

Com­pa­nies also re­duced hours for work­ers. The av­er­age work­week fell to 34.4 hours from 34.5 hours in Oc­to­ber.

The em­ploy­ment re­port comes as soft Oc­to­ber data on the hous­ing mar­ket, busi­ness spend­ing on equip­ment as well as a jump in the trade deficit to a 10-year high have height­ened fears the econ­omy is slow­ing. Growth fore­casts for the fourth quar­ter are around a 2.7 per­cent an­nu­al­ized rate. The econ­omy grew at a 3.5 per­cent pace in the third quar­ter.

In the wake of the em­ploy­ment re­port, U.S. fi­nan­cial mar­kets con­tin­ued to price in one rate hike from the Fed in 2019, com­pared with ex­pec­ta­tions for pos­si­bly two rate hikes a month ear­lier, ac­cord­ing to CME Group’s FedWatch pro­gram.

The U.S. cen­tral bank is ex­pected to in­crease bor­row­ing costs on Dec. 18-19 for the fourth time this year.

The dol­lar fell against a bas­ket of cur­ren­cies on the data. U.S. Trea­sury prices ini­tially rose be­fore turn­ing lower. U.S. stock in­dex fu­tures turned pos­i­tive.

“The data fits with some slow­ing from trend ... but is far from un­healthy for this point in the cy­cle,” said Alan Ruskin, global co-head of FX re­search at Deutsche Bank Se­cu­ri­ties. “It still al­lows the Fed to hike in De­cem­ber, but take a more cau­tious line there­after.”

Fed Chair­man Jerome Pow­ell last month ap­peared to sig­nal the cen­tral bank’s three-year tight­en­ing cy­cle was draw­ing to a close, say­ing its pol­icy rate was now “just be­low” es­ti­mates of a level that nei­ther cools nor boosts a healthy econ­omy.

Min­utes of the Fed’s Novem­ber pol­icy meeting pub­lished last week showed nearly all of­fi­cials agreed an­other rate in­crease was “likely to be war­ranted fairly soon,” but also opened de­bate on when to pause fur­ther hikes.

A broader mea­sure of un­em­ploy­ment, which in­cludes peo­ple who want to work but have given up search­ing and those work­ing part-time be­cause they can­not find full-time em­ploy­ment, rose two-tenths of a per­cent­age point to 7.6 per­cent.

Wage gains were mod­er­ate de­spite on­line re­tail gi­ant Ama­zon.com Inc rais­ing its min­i­mum wage to $15 per hour for U.S. employees last month.

Job gains have av­er­aged 170,000 per month over the past three months. The econ­omy needs to cre­ate roughly 100,000 per month to keep up with growth in the work­ing-age pop­u­la­tion. Em­ploy­ment growth could slow fur­ther in the months ahead.

The num­ber of Amer­i­cans ap­ply­ing for un­em­ploy­ment ben­e­fits is near eight-month highs. Gen­eral Mo­tors has an­nounced plans to cut up to 15,000 jobs in North Amer­ica next year, which will af­fect some as­sem­bly plants in the United States.

Re­tail em­ploy­ment in­creased by 18,200 jobs in Novem­ber, likely boosted by an early Thanks­giv­ing. Trans­porta­tion and ware­hous­ing pay­rolls rose by 25,400 jobs, driven by sea­sonal hir­ing.

How­ever, an un­usu­ally cold Novem­ber slowed hir­ing at con­struc­tion sites. Con­struc­tion em­ploy­ment rose by only 5,000 jobs af­ter com­pa­nies added 24,000 work­ers to their pay­rolls in Oc­to­ber. Man­u­fac­tur­ing em­ploy­ment in­creased by 27,000 jobs last month af­ter ris­ing 26,000 in Oc­to­ber.

Gov­ern­ment pay­rolls de­clined for a sec­ond straight month.

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