U.S. hiring slowed sharply in December as employers added 145,000 jobs, raising concerns that trade worries and a persistent downturn in manufacturing may be taking a bigger toll on the broader economy.
The unemployment rate was unchanged at a 50-year low of 3.5%, the Labor Department said Friday.
Also mildly disappointing: Job gains for October and November were revised down by a total 14,000. October’s tally was nudged from 156,000 to 152,000 and November’s, from 266,000 to 256,000.
On the one hand, a slowdown from November's booming additions was not surprising. And the economy added an average 176,000 jobs a month in 2019, more than many experts expected in light of a slowing economy and dwindling supply of available workers.
"The economy is still creating more than enough jobs to keep pace with population growth," economist Michael Pearce of Capital Economics wrote in a note to clients.
Yet several temporary factors were expected to boost job growth last month. Snowfall across the country was unusually light, reversing harsh weather in November that crimped gains in industries such as construction, retail and leisure and hospitality, Goldman Sachs said in a research note.
Also, the late Thanksgiving meant many seasonal workers who weren’t counted in the November employment survey – which was conducted mid-month – were tallied the following month, Goldman says. Retail, in fact, led all industries with 41,000 job gains.
And, the research firm says, low unemployment has spawned worker shortages that may have prompted some companies to minimize traditional year-end layoffs.
More broadly, though, leading economists expect job growth to pull back sharply from an average monthly pace of 180,000 in 2019 to about 125,000 this year. Low unemployment and a shrinking pool of available workers is likely to pose a growing hurdle to hiring. And the U.S. trade war with China and sluggish global economy, which have clobbered industrial production, increasingly could lead businesses to pull back hiring, says Scott Anderson, chief economist of Bank of the West.
That, in turn, may dampen consumer spending and a service sector that largely has been immune from manufacturers’ troubles. U.S. factory activity contracted for a fifth straight month in December amid the global turmoil and Boeing’s decision to suspend production of its 737 MAX airliner after two fatal crashes.
The U.S. and China are set to sign a Phase 1 trade agreement on January 15 but broader conflicts between the two countries remain.
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Wage growth dips
Average hourly earnings increased 3 cents to $28.32, pushing down the annual gain to 2.9% from 3.1%.
After nearing 3.5% in late 2018, pay hikes have moderated but remained at or above 3%. That has helped keep inflation stubbornly low and allowed the Fed to lower interest rates three times last year to fend off a possible recession down the road.
Broader jobless measure hits record low
A wider gauge of unemployment – that includes part-time workers who prefer full-time jobs and discouraged Americans who have stopped looking, as well as the unemployed – fell from 6.9% to 6.7%, the lowest on records dating to 1994. The number of so-called involuntary part-time workers declined by 140,000.
Industries that are hiring
Besides the healthy retail gains, leisure and hospitality added 40,000 jobs; health care, 36,000; and construction, 20,000, in a sign that better weather bolstered employment in some key sectors.
But professional and business services, typically a leading jobs generator, added just 10,000. And manufacturing cut 12,000 jobs in a sign the industry used to struggle.
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Economy added disappointing 145,000 jobs in December and the unemployment rate was unchanged at 3.5% - USA TODAY
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