Job creation was strong in 2019, but could be worst in a decade
Last year, job growth on average was slower than it was in 2018
The U.S. economy saw strong job creation in 2019, but it still could end up being the worst year in almost a decade.
The Bureau of Labor Statistics will release its final jobs report for the year on Friday morning, and it’s forecast to show employers added 164,000 jobs in December, according to a poll from Refinitiv — below blockbuster gain of 266,000 in November, but still solid. Unemployment is projected to hold steady at 3.5 percent, a half-century low, while paychecks are expected to have climbed 0.3 percent.
The projected figure would bring the 2019 total to 2.14 million, the lowest amount since 2011 when the economy added 2.09 million jobs. In 2018, the economy added 2.63 million jobs, the most in three years.
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In 2019, job growth on average was slower than it was in 2018: The monthly average between January and November last year is 180,000 jobs per month, compared with an average gain of 223,000 in 2018.
The broader picture of the labor market is consistent with economists’ expectations that the economy, in the midst of a record-long expansion, is beginning to slow, a result of the fading stimulus from President Trump’s $1.5 trillion tax cuts in 2017 and the market-rattling trade war between the U.S. and China.
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“Sometime in the next few months, we will see a very weak non-farms payroll number,” Dan North, chief economist at Euler Hermes North America, said in an emailed statement. “The economy is slowing, as is job growth on a year-over-year basis, despite November’s large 266,000 gain.”
Job creation has also been inconsistent across the industries. Last week, the U.S. manufacturing sector contracted to its lowest level since the financial crisis, spurring concerns about the health of the overall economy.
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The ISM Manufacturing Index fell for the fifth month in a row to 47.2 in December, down from November's reading of 48.1. That's the weakest reading since June 2009, when it hit 46.3, and well below the 49 reading that economists surveyed by Reuters expected.
Still, it would likely take job creation below 100,000 to rattle the Federal Reserve, which has repeatedly characterized the labor market as “strong,” to budge from its wait-and-see approach to interest rates, according to Josh Wright, chief economist at iCIMS and a former Fed staffer.
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“And even then, the stall would need to be sustained for about three months,” he said. “Rate hikes are still out of the question, especially with tensions in the Middle East causing oil prices to jump.”