Friday, December 6, 2019
Results from the U.S. Bureau of Labor Statistics (BLS) on November non-farm payrolls this morning provided the biggest positive monthly surprise in recent memory: 266K new jobs were created — way ahead of the 180K expected, which had been ratcheted back in the past couple days based on the ADP ADP private-sector payroll report of just 67K new jobs. Today’s Unemployment Rate fell to 3.5% — another 50-year low.
Revisions to the previous two months were also increased notably: +13K on September’s headline to 193K, while October’s tally rose even higher: +28K to 156K. This brings the 3-month moving average — which yesterday looked to come in around 165K, have now supplanted the 200K mark to 205K.
Suffice it to say, these are simply astoundingly good jobs numbers for a labor market this long into expansion.
Average Hourly Earnings rose 0.2% year over year last month, a bit below the +0.3% expected, but still up 7 cents per hour to an average hourly wage of $28.29. Year over year, wages are up 3.1%. So even in what had been the Achilles heel of long-term employment growth in the U.S., we are seeing steady, if still inflation-resistant, positive results.
Manufacturing, which had been registering negative totals in other industry metrics elsewhere, outperformed all other industries last month with 54K new jobs, followed by Healthcare and Leisure/Hospitality at 45K each. Perhaps less surprisingly, Motor Vehicles and Parts grew by 41K, largely due to the ending of the General Motors (GM) strike that ended last month.
Labor Force Participation stayed basically constant, down 10 basis points to 63.2%. The U-6, aka “real unemployment,” dipped from 7.0% to 6.9% — also consistent with rates we’ve literally not seen since “Easy Rider” was playing in local movie theaters.
As a result, the stock market has risen dramatically in today’s pre-market, including the Dow up more than 100 points ahead of the opening bell. The dollar index also jumped on the news. Yet it does not seem as if labor market strength is immediately going to bring the Fed back into play to start raising interest rates again.
With so many moving parts, and so many potential headwinds, it’s extremely difficult to arrive at economic results this positive (and unexpected). As we see green across the board in market indexes, it’s virtually impossible to see a repeat of last year’s woeful December performance coming into play. We should all enjoy it while it lasts.
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