US Adds 145K Jobs In December, Wage And Labor Market Gains Consistent With Fed's Outlook

The Bureau of Labor Statistics released employment data for the month of December, and the jobs report came in below economists expectations.

Here’s a rundown of everything you need to know.

What You Need To Know About The Jobs Report

The nonfarm payroll number came in at +145,000, below consensus economist expectations of +160,000.

The unemployment rate remained unchanged at 3.5%, its lowest level in 50 years. The so-called “real” unemployment rate, which factors in those out of the workforce and those who are underemployed, fell 0.2% to 6.7%.

Wage growth also came in slightly below expectations, up 2.9% from a year ago.

The retail sector led the gains in December by adding 41,000 jobs, more than any other industry. The manufacturing sector struggled in December, losing 12,000 jobs on the month and gaining just 57,000 jobs total in 2019 after adding 216,000 in 2018.

In addition to the weak December numbers, the Labor Department also revised its jobs growth estimates for the last two months lower as well. The Labor Department cut 4,000 jobs from its October estimate and 10,000 jobs from its November estimate, bringing the revised monthly totals down to +152,000 and +256,000, respectively.

For the full year, the U.S. economy added 2.1 million jobs, an average of 176,000 per month. Job growth was down from 2.7 million in 2018, 2019 was the slowest year for U.S. job growth since 2011.

Market Reaction To The Jobs Report

The U.S. economy has now added jobs for 111 consecutive months, by far the longest streak in history (48 months from 1986 to 1990).

Investors initially reacted negatively to the lackluster jobs numbers, with the SPDR S&P 500 ETF Trust SPY giving up most of its pre-market gains.

Investors will now watch to see if the soft jobs report will impact the Federal Reserve’s monetary outlook.

RSM Chief Economist Joe Brusuelas said the December numbers are well within the range of the Fed's current economic outlook.

"Modest wage and labor market gains are consistent with the Fed’s forward look on policy barring a significant exogenous shock to the economy," Brusuelas said.

The bond market is currently pricing in a 54.8% chance of at least one additional Fed rate cut by the end of 2020, according to CME Group.

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