Companies dramatically increased hiring in December, according to this morning’s monthly update from the US Bureau of Labor Statistics. The substantially larger-than-expected increase in private-sector employment suggests that the economic outlook is considerably brighter than implied by the stock market, which has fallen sharply in recent months.
Private payrolls rose 301,000 last month, or nearly twice as much as the consensus forecast via Econoday.com.
More importantly, the year-over-year trend picked up to a 2.1% pace – the first reading above 2% since September 2016. Correction: technically, the annual rate ticked up to 2.046% in December, the first reading up 2.0% since September 2016. Rounding the change to one digit, however, translates to a 2.0% rise.
Future revisions to the employment data may trim the results and so a degree of caution is required for interpreting today’s results. As a general rule, it’s wise not to read too much into any one number. Nonetheless, it appears that the employment trend remains solidly positive, reaffirming The Capital Spectator’s analysis that recession risk remains low for the US, at least through the end of 2018.
“The jump in payrolls in December would seem to make a mockery of market fears of an impending recession,” says Paul Ashworth, chief economist at Capital Economics “This employment report suggests the US economy still has considerable forward momentum.”
Yesterday’s ADP Employment Report for December offers a similar view. The firm’s estimate of private payrolls reflects a strong 271,000 advance, which translates to a robust 2.0% year-over-year gain.
A number of challenges still lurk for the year ahead, but it’s clear that the US labor market ended 2018 on a solidly upbeat note.
“The US economy will eventually fall into recession, maybe as soon as next year, but the December employment report indicates that this isn’t going to happen anytime soon,” comments David Berson, Nationwide’s chief economist.
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