Strong job growth allays recession fears in America
December 07 2019 11:35 PM
RELATED STORIES
viewpoint

Latest monthly employment report released by the US Labour Department seemed to have squashed any lingering concerns about an imminent recession in the world’s largest economy.
The unemployment rate ticked back down to its lowest level in nearly half a century and wage gains remained near their strongest in a decade, the Labour Department’s closely watched monthly employment report showed on Friday.
The US jobs market turned in a “stellar” performance in November, with nonfarm payrolls surging by 266,000 and the unemployment rate falling to 3.5%, the report said.
According to Reuters, the numbers suggest consumers will keep the longest economic expansion in history, now in its 11th year, chugging along into next year when Americans will decide whether to re-elect President Donald Trump.
The report added to other fairly upbeat data on the trade deficit, housing and orders for big-ticket goods. Together, the improving data appear to validate the Federal Reserve’s (Fed) decision in October to signal no further interest rate cuts are needed for now.
The US central bank cut rates three times this year, starting in July when it reduced borrowing costs for the first time since 2008.
“Bottom line, America is working,” Larry Kudlow, director of the National Economic Council, told CNBC’s Squawk on the Street. “These are very strong numbers. These are happy numbers, these are sunny Friday numbers,” he said.
The jobs growth was the best since January’s 312,000 and well clear of the November 2018 total of 196,000. While hopes already were up, much of that was based on the return of General Motors workers following a lengthy strike, CNBC noted.
That dynamic indeed boosted employment in motor vehicles and parts by 41,300, part of an overall 54,000 gain in manufacturing. The vehicles and parts sector had fallen by 42,800 in October.
However, the job gains were spread among a multitude of sectors. Health care added 45,000 positions after contributing just 12,000 in October.
Leisure and hospitality increased by 45,000 and professional and business services rose by 31,000; the two sectors respectively are up 219,000 and 278,000 over the past 12 months. Wage gains also were a touch better than expectations.
Average hourly earnings rose by 3.1% from a year ago, while the average workweek held steady at 34.4 hours.
“The strong jobs report comes amid a challenging year for the US economy,” CNBC reported.
Recession fears surged in late-summer amid worries that a global slowdown would spread to American shores. The back-and-forth lobbing of tariffs between the US and China also raised fears of instability, and the bond market sent what has been a reliable recession indicator when short-term government yields rose above their longer-term counterparts.
The Fed reacted by cutting its benchmark interest rate three times, part of what officials deemed insurance against a potential slowdown.
Those recession fears have ebbed recently, though, as consumer and business sentiment remains high, spending remains resilient and the stock market scales new highs.
The Fed meets next week, and officials have been clear that they plan no further rate changes unless conditions change significantly.



There are no comments.

LEAVE A COMMENT Your email address will not be published. Required fields are marked*
MORE NEWS