The Employment Situation in the December jobs report is very strong, with the U.S. economy creating far more jobs than forecast and wages continuing to rise at a pace not seen in a decade.
The Labor Department via the Bureau of Labor Statistics said the U.S. economy added a whopping 312,000 jobs in December, crushing the forecast.
The consensus was looking for just 180,000, ranging from as low as 160,000 to as high as 200,000.
The unemployment rate rose slightly by 0.2% to 3.9%, the result of more people entering the labor market and looking for work.
The labor force participation rate came in at 63.1%, up from 62.9% the previous month. The employment population ratio was unchanged at 60.6% for the third consecutive month.
However, both measures were up by 0.4% over the year and unemployment has remained below 4% for 8 consecutive months, the longest period since the 1960s.
Manufacturing added a solid 32,000 jobs in December, bringing the industry total over the year to a stunning 284,000. Manufacturing added 207,000 jobs in 2017, a reversal from the “life support” trend under the previous administration.
Construction added 38,000 in December, bringing the industry total to 280,000 jobs in 2018. That compares to an already strong increase of 250,000 in 2017.
The quality, in addition to the quantity of jobs created under the Trump Administration has clearly and finally resulted in upward wage pressure.
In December, average hourly earnings for all employees on private nonfarm payrolls rose 11 cents to $27.48. Over the year, average hourly earnings have increased by 84 cents, or 3.2%.
Each of the wage measures beat their respective consensus forecast and average hourly wage exceeded 3% for the third straight month, gains not seen since April 2009.
Average hourly earnings of private-sector production and nonsupervisory employees increased by 9 cents to $23.05 in December.
For context, average hourly earnings increased by 81 cents, or 3.1% from the previous year in November, which matched October as the largest single-month gain since 2009.
Wage growth in the month of December proved even stronger.
“In theory, this report should keep the Fed from sounding more aggressive on rates,” Tim Anderson, analyst at TJM Investments said. “If Chairman Jerome Powell confirms that today, markets will rip.”
The Dow Jones Industrial Average (^DJI) already shot up over 300 points following the news.
The Employment Situation, known more commonly as the monthly jobs report, follows the ADP National Employment Report released Thursday. ADP said the U.S. private sector alone added 271,000 jobs.
“We wrapped up 2018 with another month of significant growth in the labor market,” said Ahu Yildirmaz, vice president and co-head of the ADP Research Institute.
Revisions
The change in total nonfarm payroll employment for November was revised up from +155,000 to +176,000, and the change for October was revised up from +237,000 to +274,000.
With these revisions, employment gains in October and November combined were 58,000 more than previously reported.
“With more than 5,000,000 jobs added since the 2016 election, the American economy surpassed 150,000,000 jobs for the first time ever,” Secretary of Labor Alex Acosta said in a statement responding to the report.
“While job growth remains strong, it is important that policymakers continue to foster an environment that promotes job creation and wage growth. This Administration will keep working to grow our economy and create family-sustaining careers for America’s workers.”
