U.S. job growth likely picked up in December with wages expected to have increased solidly, which could help to allay a recent upsurge in fears about the economy’s health that have roiled financial markets, Trend reports referring to Reuters.
The Labor Department will publish its closely watched monthly employment report on Friday on the heels of surveys showing sharp declines in consumer confidence and manufacturing activity last month. Both were seen as more red flags that the economic expansion, now in its ninth year and the second longest on record, is losing steam.
Nonfarm payrolls probably increased by 177,000 jobs last month, according to a Reuters survey of economists, after rising 155,000 in November. Slow job gains in November were largely blamed on unseasonably chilly temperatures, which stymied hiring at construction sites.
“This will be good news for otherwise depressed sentiment in the financial markets,” said Sung Won Sohn, chief economist at SS Economics in Los Angeles. “There is growing concern that the economy will slowdown significantly 2019.”
Barring a big miss relative to estimates or major revisions to prior months’ data, the December jobs gain is likely to push total U.S. employment above 150 million jobs for the first time.
Average hourly earnings are seen rising 0.3 percent in December after gaining 0.2 percent in November. The annual increase in wages will, however, probably dip to 3.0 percent from 3.1 percent in November as the big increase in December 2017 drops out of the calculation.
The unemployment rate is forecast steady at near a 49-year low of 3.7 percent for a fourth straight month. The December report will include annual revisions to household survey data from which the unemployment rate is calculated, going back five years.
The Labor Department has not been affected by the partial shutdown of the U.S. government and will continue to publish economic data complied by its statistics agency, the Bureau of Labor Statistics.
Data releases from Census Bureau and Bureau of Economic Analysis have been suspended during the shutdown, which started on Dec. 22 amid demands by President Donald Trump for $5 billion in border wall funding.
A strong employment report could well keep the Federal Reserve on course to continue raising interest rate this year, deepening its rift with Wall Street and Trump, who has chastised the Fed and its chairman, Jerome Powell, repeatedly for its rate increases. Powell is due to appear on a panel with his two predecessors about two hours after the report’s release.
The U.S. central bank raised interest rates four times in 2018. The Fed last month forecast two rate hikes this year and signaled its tightening cycle is nearing an end in the face of financial market volatility and slowing global growth.
U.S. financial markets are projecting no rate hikes in 2019. In the latest signal that investors see little room for the Fed to lift rates any further, yields on 2-year U.S. Treasury notes US2YT=RR on Thursday dropped below the Fed’s policy rate for the first time in more than a decade.