December Report Caps Solid Year of Jobs, Wage Growth
Total nonfarm payroll employment rose by 145,000 in December, slightly lower than previous months, the Bureau of Labor Statistics reported Friday.
BLS said the unemployment rate held at 3.5 percent in December, while the number of unemployed persons stood unchanged at 5.8 million. A year earlier, the jobless rate was 3.9 percent and the number of unemployed persons was 6.3 million.
BLS revised down by 4,000 October’s numbers, from +156,000 to +152,000; and November’s numbers by 10,000 from +266,000 to +256,000. With these revisions, employment gains in October and November combined were 14,000 lower than previously reported. After revisions, job gains averaged 184,000 over the past three months.
The report said the labor force participation rate was unchanged at 63.2 percent in December. The employment-population ratio was 61.0 percent for the fourth consecutive month but rose by 0.4 percentage point over the year.
“Job growth increased less than expected in December, which brought the average for 2019 to 176,000 jobs per month,” said Joel Kan, Associate Vice President of Economic and Industry Forecasting with the Mortgage Bankers Association. “While last year’s job gains were the slowest since 2011, it was another solid year of job creation and unemployment remains at a 50-year low.
Kan noted the economy slowed in 2019 relative to 2018, “and we expect the slowdown to continue into 2020. The manufacturing sector, which has been weak both here and globally due to the trade war, ended 2019 substantially weaker than in 2018. Wage growth was still positive last month, but there was a downshift from previous months.”
Kan added with “such a tight job market and low unemployment rate, we still hold to the view that conditions are supportive for home-purchase activity, and are cautiously optimistic that we will see gradual growth in home sales and purchase originations in 2020. However, financial markets will likely remain volatile due to ongoing geopolitical uncertainties.”
Odeta Kushi, Deputy Chief Economist with First American Financial Corp., Santa Ana, Calif., noted December’s report marked 10 consecutive years of payroll gains. “What’s more important is the steady rise of the labor force participation rate, which is 0.6 percentage points higher than one year ago, and now only 1.7 percentage points below the peak in 1999,” she said. “As this participation rises, competition among employers for workers increases, leading to higher wages. “That’s good news for potential home buyers in 2020, who will benefit from the affordability boost that comes from increased purchasing power. The relationship between prime-age participation and wage growth just shows that you’ve got to play to get paid.”
Jay Bryson, Acting Chief Economist with Wells Fargo Securities, Charlotte, N.C., said Fed policymakers likely won’t be changing policy anytime soon. “In broad terms, the December labor market report shows that the labor market generally remains on a firm foundation,” he said. “Employment gains have averaged 184K per month over the past three months. Although not quite as strong as a year ago, this pace of gains is solid.”
Doug Duncan, Chief Economist with Fannie Mae, Washington, D.C., said the jobs report “does little to change expectations for the economy”
“In terms of the housing market, residential construction (including specialty trade contractors) posted a modest increase, and we expect continued gains in residential construction employment going forward,” Duncan said. “Overall, we believe today’s report is consistent with the Fed’s stance of ‘pausing’ on rate cuts for the foreseeable future.”
BLS reported average hourly earnings for all employees on private nonfarm payrolls rose by 3 cents to $28.32 in December. Over the past 12 months, average hourly earnings increased by 2.9 percent. Average hourly earnings of private-sector production and nonsupervisory employees, at $23.79, were little changed (+2 cents).
The report said the average workweek for all employees on private nonfarm payrolls was unchanged at 34.3 hours in December. In manufacturing, the average workweek and overtime remained at 40.5 hours and 3.2 hours, respectively. The average workweek of private-sector production and non-supervisory employees held at 33.5 hours.
