By Thomas Cooley and Peter Rupert
The establishment survey from the BLS employment report revealed a 155,000 increase in the number of new employees, with small downward revisions over the previous two months. This was slightly below analysts expectations but was also consistent with other signs in the labor market that point to employers having trouble finding good matches in spite of record high vacancies. There was an increase of 161,000 in the private sector while government employment fell 6,000. Private service producing added 132,000, of which 40,100 came from health care and social assistance jobs. The somewhat disappointing parenthetical insert reflects that many were forecasting gains near 190,000. However, the economy often is hit with shocks, fires in California, cold/snowy weather in the east and midwest, that can have effects on monthly numbers.
Average weekly hours slipped from 34.5 to 34.4 while average hourly earnings increased from $27.29 to $27.35. Year over year average hourly earnings increased 3.1% leading to real wage gains as earnings have outpaced inflation. This is a very modest increase but it is consistent with a tight labor market in which wages are being bid up.
Labor force participation rates remained steady at their low levels and the employment population ratio also held steady. The current recovery has also delivered the lowest unemployment rate for African Americans (5.9%) and Asians (2.7%) since the BLS began tracking the series, 1972 and 2000 respectively. The unemployment rate for women (3.8%) is the lowest since the 1950’s.
On Thursday the BLS announced a 2.3% productivity increase in November. Output rose 4.1% and hours worked rose 1.8%. Over the year productivity increased 1.3%.
Although this is not a strong report it is consistent with a labor market that is continuing to generate jobs at a healthy rate in spite of uncertainties about trade and increased financial market volatility. It is hard to see from this report why the Fed would back off its planned December rate hike although future hikes seem more uncertain in light of the uncertainties.