United States: Payroll growth decelerates in December
January 10, 2020
The U.S. labor market lost some steam at the end of 2019 according to the December’s job report. Non-farm payrolls increased by 145,000 in December, underwhelming market expectations of 164,000 and down from November’s downwardly revised 256,000 job gains (previously reported: 266,000). The three-month average payroll gains edged down to 184,000 in December from 200,000 in November.
Delving into the details, job losses were registered in the manufacturing sector, while the transportation and warehousing labor force fell sharply as well. Meanwhile, hiring in education and healthcare—a mainstay of the labor market—moderated, while professional and business services job growth slowed. On a brighter note, job gains in leisure and hospitality were strong in December and retail trade payrolls rebounded notably, likely linked to the holiday shopping season.
The unemployment rate remained at a near 50-year low of 3.5% in December, matching expectations, while the labor force participation was stable at November’s 63.2%. Wage growth slowed in December, with hourly earnings rising a meager 0.1% month-on-month in December, down from November’s 0.3% gains. Annual wage growth weakened to 2.9% in December from 3.1% in November, below market expectations and the first result below 3.0% in a year and a half.
Commenting on the December jobs report, Leslie Preston at TD Economics noted:
“The headlines may focus on the disappointment in payrolls gains versus consensus, but overall December's job report was pretty solid. The main sore point is wage gains, which continue to be a bit modest given that the unemployment rate is at a 50-year low. […] All in, a low unemployment environment, and wage gains which are outpacing inflation give a decent backdrop for consumer spending heading into 2020.”