Economy added a whopping 312,000 jobs in December

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Jan. 4, 2019 / 1:34 PM GMT

By Lucy Bayly

The U.S. economy gained 312,000 jobs in December vs 176,000 expected, a robust gain that indicates the labor market has remained largely immune to recent Wall Street whiplash and rumblings of an economic slowdown.

The monthly jobs report, released Friday by the Bureau of Labor Statistics, also showed that the unemployment rate ticked up to 3.9 percent as more people entered the workforce.

Wage growth for the month was up four-tenths of a percent, for an annual increase of 3.2 percent.

“The December employment report continues to show just how impressive the labor market is as we kick off 2019,” said Steve Rick, chief economist at CUNA Mutual Group. “After a disappointing November report, December’s strong performance quells any lingering feelings that a hiring plateau might have occurred from the impact of tariffs and recent market volatility.”

The latest numbers put the average pace of monthly hiring for 2018 at a healthy 220,000, higher than either of the past two years. However, 2019 could be a different story. As the effects of President Donald Trump’s fiscal stimulus plan wear off — including the regulatory relief and the corporate tax cuts that gave companies a hiring boost last year — that monthly jobs number is expected to fall closer to 160,000.

Despite strong market fundamentals, economists still see an escalated risk in the coming months, with market volatility and geopolitical concerns continuing to weigh on growth sentiment. And with the U.S. already at near-full employment, there is anxiety around worker availability and whether or not a scarcity of qualified employees will forcibly drive up wages, which would affect profitability, bolster the chances of inflation — and likely lead to an interest rate hike.

“The solid news on the job market is one argument to allow the Federal Reserve to stick to its forecast for two interest rate hikes in 2019 despite low inflation,” said Mark Hamrick, senior economic analyst at Bankrate. “We’ll need to see whether business and consumer confidence holds up, or not, in the coming months amid the headwinds including U.S./China trade and slowing global growth.”

Stock futures were sharply up after the BLS report, leaving Wall Street to now turn its eyes toward Federal Reserve Chairman Jerome Powell when he speaks at a monetary policy panel, along with former Fed heads Janet Yellen and Ben Bernanke, at the American Economic Association and Allied Social Science Association annual meeting in Atlanta, Georgia.

Powell spooked markets in December at his last appearance, when he failed to reassure Wall Street that the Fed was able to “feel the market,” as President Donald Trump has termed the central bank’s approach towards rate hikes. Investors will be listening closely for any kind of indication from Powell that the Fed will not tighten its grip on the economy in the face of an increasingly sluggish outlook.

Markets have been on a roller-coaster ride so far in 2019, with the Dow falling by 660 points on Thursday after tech giant Apple slashed its guidance for the last quarter and a manufacturing survey showed factory activity across America had fallen for the first time in two years.

All three major indexes were already trending upward on Friday morning after reports from Beijing that China and the U.S. would be restarting trade talks on Jan. 7. The world’s two largest economies are currently locked in a tit-for-tat trade battle that has rocked global markets for months and stoked fears of an impending global economic slowdown.

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