Friday, December 7, 2018
Fresh economic data in the form of new non-farm payroll numbers for November have been released this morning by the Bureau of Labor Statistics (BLS), and the results have swung pre-market futures into the green. This is interesting, considering the headline number of 155K new jobs last month is below the consensus of roughly 200K. The Unemployment Rate stayed unchanged at 3.7%.
Revisions for the past two months ratcheted down by 12K jobs, to 237K in October and 119K in September. This brings our 3-month average to 170K new jobs per month — less hot than we’d gotten used to seeing over the past few years (which is natural in that there is ultimately a finite number of potential employees, and fewer now than five years ago), but still well above the number we need to see to keep the U.S. labor market buoyant.
Average Hourly Earnings ticked up slowly again, by 0.2% or +6 cents to $27.35 per hour. Year over year, we’re up 81 cents, or 3.1%. These figures, keeping with our longer-term patterns, are lower than expected, and historically low considering we’ve remained at sub-4% unemployment for quite some time now. We’d have assumed higher pay would be accompanying such a tight labor force, but this is something that has been consistently absent throughout virtually the entire 10-year economic recovery period.
As mentioned above, the markets love these numbers. Had they been closer to consensus, we may have seen some new trepidation related to fears of the Federal Reserve returning to a more hawkish stance on interest rate hikes. Still expected a couple weeks from now is another 25 basis-point raise to a 2.25-2.50% range — that’s already baked in. But beyond, it is very much an open question whether the Fed will stand pat or keep incrementally upping rates; today’s lower-than-expected figures from the labor market might be the salve needed to cool their heels going into 2019.
The Labor Force Participation Rate remained consistent at 62.9%, which itself is interesting to consider: with unemployment steady at 3.7%, we still see fewer than 2/3rds of potential employees filling jobs. The U-6 (aka “real unemployment”) was steady at its historically low 7.6%. These numbers continue to suggest there is still room for labor market growth. But where?
Healthcare, as per normal, led the way with 32K new jobs, followed by Manufacturing at 27K and Transportation at 25K. Retail was a mixed bag, but ultimately brought 18K new positions last month to work holiday shopping season (although warehouse jobs look to be taking a bigger share of seasonal employment as more consumers purchase items online than at the stores). Government actually saw a negative jobs number last month, as the private sector accounted for 161K.
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