Job growth slows as China trade tiff grows

The Arizona Republic - - America’s Markets - Paul David­son

U.S. em­ploy­ers added a dis­ap­point­ing 155,000 jobs in Novem­ber as hir­ing slowed amid worker short­ages, the coun­try’s trade fight with China and wild stock mar­ket swings.

The un­em­ploy­ment rate was un­changed at a near half-cen­tury low of 3.7 per­cent, the La­bor Depart­ment said Fri­day.

Economists sur­veyed by Bloomberg had es­ti­mated that 199,000 jobs were added last month. Also, em­ploy­ment ad­di­tions for Septem­ber and Oc­to­ber were re­vised down by a mod­est 12,000.

The volatile stock mar­ket, which rose at the open of trading, re­sumed its pat­tern of sharp de­clines this week, with the Dow Jones in­dus­trial av­er­age end­ing down 559 points, or 2.2 per­cent, on Fri­day.

Many an­a­lysts ex­pected hir­ing to slow in Novem­ber af­ter ro­bust job gains of well over 200,000 the prior month. That total was likely in­flated by a re­bound in the Caroli­nas af­ter Hur­ri­cane Florence idled work­ers and cur­tailed pay­rolls in Septem­ber.

Other cross­cur­rents were also at work last month. Win­ter storms in the North­east and Mid­west likely re­duced em­ploy­ment by about 20,000, Gold­man Sachs es­ti­mated. Mean­while, Cap­i­tal Eco­nomics ex­pected a mod­est bounce­back in job growth in the Flor­ida pan­han­dle af­ter Hur­ri­cane Michael tem­pered Oc­to­ber advances but the re­search firm reck­oned the bump would be off­set by the ef­fects of the Cal­i­for­nia wild­fires.

More broadly, monthly job in­creases have been sur­pris­ingly strong this year, av­er­ag­ing more than 200,000, de­spite a his­tor­i­cally low un­em­ploy­ment rate that’s lead­ing to wide­spread worker short­ages.

Some economists ex­pect the brisk pace to slow. The 10 per­cent tariff the Trump ad­min­is­tra­tion slapped on $250 bil­lion in Chi­nese im­ports has dinged busi­ness con­fi­dence and the re­cent truce be­tween the two na­tions came af­ter La­bor’s Novem­ber jobs sur­vey.

Busi­ness op­ti­mism also may have been damp­ened by the stock mar­ket’s mid-Novem­ber sell-off and the sput­ter­ing global econ­omy. Ini­tial job­less claims, which re­flect lay­offs, have drifted higher in re­cent months.

Wage growth

Av­er­age hourly earn­ings rose 6 cents to $27.35, leav­ing the an­nual gain un­changed at a nine-year high of 3.1 per­cent.

Em­ploy­ers are likely to con­tinue to bump up wages as they in­creas­ingly strug­gle to find qual­i­fied work­ers. That could lead the Fed­eral Re­serve to raise in­ter­est rates faster to head off a run-up in in­fla­tion. The Fed is ex­pected to raise its key short-term in­ter­est rate later this month for the fourth time this year.

In­dus­tries that are hir­ing

Health care led the job gains with 40,000. Pro­fes­sional and busi­ness ser­vices added 32,000; trans­porta­tion and ware­hous­ing, 25,000; re­tail­ers, 18,000, as they geared up for the hol­i­day sea­son; and leisure and hos­pi­tal­ity, 15,000.

Man­u­fac­tur­ers added 27,000 jobs de­spite the trade stand­off with China. And con­struc­tion added 5,000. Min­ing and log­ging trimmed 3,000 jobs as oil prices con­tinue to tum­ble.

Wider job­less­ness mea­sure rises

A broader mea­sure of un­em­ploy­ment – that in­cludes dis­cour­aged work­ers who have given up their job searches and part-time employees who pre­fer full-time po­si­tions – rose to 7.6 per­cent from 7.4 per­cent, which was a 17-year low. The num­ber of these so-called in­vol­un­tary part-time work­ers in­creased by 181,000 to 4.8 mil­lion.

This gauge of un­der­em­ploy­ment gen­er­ally has been fall­ing as the im­prov­ing la­bor mar­ket draws in many Amer­i­cans on the side­lines. The in­crease last month could in­di­cate that pos­i­tive trend may be pe­ter­ing out. Yet it also could sim­ply re­flect nor­mal volatil­ity in the fig­ures from month to month.

Un­em­ploy­ment down for some

The un­em­ploy­ment rate for African Amer­i­cans fell from 6.2 to 5.9 per­cent, match­ing the record low set in May.

Mean­while, the job­less rate de­clined from 4 to 3.5 per­cent for high school grad­u­ates who didn’t at­tend col­lege and from 6 to 5.6 per­cent for Amer­i­cans with less than a high school diploma. The rate ac­tu­ally rose for col­lege grad­u­ates, from 2 per­cent to 2.2 per­cent.

As em­ploy­ers strug­gle to find work­ers, they’re pro­vid­ing more op­por­tu­ni­ties to blacks, those with less ed­u­ca­tion and other dis­ad­van­taged Amer­i­cans who tra­di­tion­ally have had a tougher time find­ing jobs and are avail­able in greater num­bers.

What it means

Wall Street ini­tially seemed to like the tepid jobs total, fig­ur­ing it could make the Fed more likely to hold in­ter­est rates steady at a meeting later this month or slow the pace of hikes next year. The Dow Jones in­dus­trial av­er­age was up 100 points in early morn­ing trading.

But those stock gains turned into sharp losses for the day as in­vestors re­al­ized that was un­likely, es­pe­cially with an­nual pay in­creases now top­ping 3 per­cent. Plus, the un­em­ploy­ment rate main­tained its 49-year low, likely herald­ing sharper wage growth in the months ahead.

“We see a De­cem­ber rate hike as largely a done deal,” says econ­o­mist Les­lie Pre­ston of TD Eco­nomics.

Pre­ston says the fewer-than-ex­pected job gains could sim­ply mean em­ploy­ers are hav­ing a tougher time find­ing work­ers – a pos­i­tive for Amer­i­cans’ pay­checks.

Paul Ash­worth of Cap­i­tal Eco­nomics says it sig­nals an an­tic­i­pated slow­down in an econ­omy and la­bor mar­ket that have been juiced by fed­eral tax cuts and spend­ing in­creases in re­cent months.

“This is still a solid gain that sug­gests eco­nomic growth is grad­u­ally slow­ing back to­ward its” nat­u­ral pace, he says.

Al­ter­na­tively, the lack­lus­ter jobs total could be a weather-re­lated blip. Bar­clays econ­o­mist Michael Gapen noted that cold and snowy weather crimped job gains in con­struc­tion and leisure and hos­pi­tal­ity.

“The over­all jobs pic­ture re­mains strong,” says Wells Fargo econ­o­mist Sarah House.

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