Hicks: Jobs Report Can Ease Recession Worries

Hicks: Jobs Report Can Ease Recession Worries

There are still areas of concern for the year, especially as it relates to freight demand, but keep in mind that the majority of economic activity in the consumer spending. Both were seen as more red flags that the economic expansion, now in its ninth year and the second longest on record, is losing steam.

Stocks surged on the news, along with word that the US and China will hold trade talks next week and comments from Federal Reserve Chairman Jerome Powell that the USA central bank will be flexible in judging whether to raise interest rates.

But futures soon recovered to levels they were at earlier in on Friday, after China and the United States planned for a fresh round of trade talks on January 7-8 to try and resolve their dispute.

The average monthly jobs growth in 2018 was 220,000 compared to 182,000 in 2017 and 195,000 in 2016.

The construction sector also delivered some bountiful pay increases in the latest month.

In addition to the big job gains, wages jumped 3.2 percent from a year ago and 0.4 percent over the previous month. That lifted the annual increase in wages to 3.2 percent, matching October's gain, from 3.1 percent in November.

A separate household survey released by BLS shows that although the unemployment rate increased by 0.2 percentage points (p.p.) to 3.9 percent in December, it went up for the right reasons: more workers are coming off the sidelines and looking for work, signaling that the USA economy continues to hum along.

Among the unemployed, the number of job leavers - unemployed people who immediately look for new work upon departure - increased by 142,000 in December to 839,000.

Despite the general strength in hiring in the economy, job growth in the transportation and logistics sector stumbled in December, as employment grew by just 2,200 during the month.

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Given the fast-moving market developments and the weakening factory data, Friday's solid jobs report might not offer the kind of evidence Fed officials will want to see as proof that the US economy has weathered recent turbulence. The numbers came amid a broader economic agenda in which the president drastically reduced regulation and slashed the corporate tax rate from one of the highest in the world (35 percent) to 21 percent.

Friday's report will be the last such snapshot Fed officials receive before their next meeting, January 29-30.

The U.S. central bank raised rates four times in 2018. Rising interest rates?However, the new evidence of a strong economy could add to the case for the Federal Reserve to continue to raise interest rates this year, something Trump has aggressively and publicly complained about.

The markets have been turbulent amid concerns that the US economy will be hurt by weakness in other countries. The Dow suffered its worst December decline since the middle of the Depression in 1931 as surveys of economists and business leaders suggested the United States could be in a recession by 2020.

Futures traders expect the Fed to hold steady through the year, and in fact are pricing in a 45 percent of a rate cut by the end of 2019. The comparable increases across the whole economy, both hourly and weekly, were +3.2%. This pattern of growth echoes what ADP reported in November - though 92,000 more jobs were created in December in total.

Economists had expected the pace of hiring would slow in December, as employers had trouble finding the workers they needed.

The jolt in hiring offered a dose of reassurance after a tumultuous few months on the financial markets.

Several sectors saw a pickup in hiring. Metal ore mining, meanwhile, saw a decrease of 100 jobs to 38,400.