Just the Facts
Five Facts on The December Jobs Report
By No Labels
January 4, 2019 | Blog
On Friday, the Labor Department released its monthly hiring and unemployment figures for the month of December. Here are five facts on the December Jobs Report:
The United States added 312,000 jobs in December, far surpassing economists’ forecasts of 176,000 new jobs
The impressive jobs numbers represent the largest monthly gain since February 2018 when the economy added 324,000 jobs and continues the trend of strong job growth, as this is the 99th straight month in which the U.S. economy has added jobs. Julia Pollak, a labor economist at the online employment market site ZipRecruiter, summarized the significance of this report, stating, “The overall picture is that there is strong job growth on Main Street and it continues to be quite robust, despite uncertainty on Wall Street.”
Despite the increase in jobs, the unemployment rate rose to 3.9% in December, an increase of .2%
Between September and November, the unemployment rate remained steady at 3.7%, the lowest it had been in the U.S. since 1969. While it may seem counterintuitive that the economy can add jobs and simultaneously see an increase in the unemployment rate, this isn’t necessarily cause for alarm. In fact, as Natalie Kitroeff of The New York Times explains, the increase in the unemployment rate is a result of more people who were sitting on the sidelines returning to the labor force, likely drawn in by the steady increase in wages. In December alone, the labor force added 419,000 people, bringing overall participation to 63.1%, the highest share since 2014.
Average hourly earnings rose .4% in the past month and 3.2% over the past year, the best year-over-year gain since 2008
The .4% increase brings the average hourly earnings for all private-sector workers to $27.48. This was the third straight month in which wages rose more than 3% from a year earlier, something that had not happened since the Great Recession ended more than nine years ago.
The report shows that the economy has largely been able to withstand the political turmoil and trade disputes that have been an area of concern
Over the past several months economists, investors and politicians alike have expressed concern over growing trade disputes between the U.S. and several of its key trading partners, including Canada, Mexico, the European Union, and China. While the U.S., Canada, and Mexico were able to reach an agreement on a new version of the North American Free Trade Agreement, dubbed the U.S.-Mexico Trade Agreement or USMCA , many questions remain as to whether the U.S. and China, the world’s two largest economies, will be able to reconcile their differences.
The strong December jobs report makes it likely that the Federal Reserve will continue to raise interest rates
Central banks use rate hikes to deliberately curb growth in an effort to keep economies stable, prolong growth rates, and limit inflation and periods of economic decline. With better-than-average jobs numbers and all-time highs in the stock market, Federal Reserve Chairman Jerome Powell raised rates three times in 2018. Most recently, the Fed in September raised the benchmark federal funds rate to a range of 2-2.25%. While recent turmoil in the stock market and strong criticism from President Trump have caused some to wonder whether Federal Reserve Chairman Jerome Powell would continue to increase interest rates, the December jobs report is a strong indication may strengthen Powell’s resolve to stay the course. However, while the Fed is expected to hike rates twice over the course of 2019, it is possible that the first one will not be announced until at least June.