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Economic Data Deluge

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The long-expected non-farm payroll report for December from the U.S. Bureau of Labor Statistics (BLS) has been released ahead of today’s opening bell, and results were a little lower than expected (though far from abysmal): 145K new jobs were created last month, down from the consensus 160K. The Unemployment Rate was unchanged at half-century lows of 3.5%.

The private sector brought in 139K new jobs in December according to this survey, down considerably from Wednesday’s ADP (ADP - Free Report)  report that showed 202K private sector jobs created last month. This would leave 6000 new jobs the balance from the government side, which indicates — upon the rise of a new decade — U.S. census layoffs have yet to register in these numbers. As 2020 moves along, we should see government hiring post lower figures, perhaps even to the negative.

Revisions for the past two months also pointed downward: November’s boffo 266K originally reported is now trimmed to a still-great 256K, while October’s 152K now reported gives up 4000 hires from the initial number. This brings the 3-month average of job gains to a more-than-respectable 184K, which is greater than about any analyst could have reasonably guessed this time a year ago.

Average Hourly Earnings grew last month, but only by 0.1% — or 3 cents per hour, to an average hourly wage of $28.32. This comes to year-over-year wage growth of 2.9%, which is 20 basis points lower than originally reported this time a month ago. It also represents the smallest annual gain since July 2018, and remains the only dent in the armor of a years-long robust U.S. labor market: anybody who wants a job can apparently have one, but perhaps for less money than desired.

Interestingly, the breakdown by industry is not what one might expect coming out of a holiday hiring season: Retail led the way with 41K new jobs, followed by Leisure/Hospitality at 40K and Healthcare at 28K. Where we saw monthly job losses was -12K in Manufacturing, perhaps related to our ongoing trade war with China, and -10K for Transportation, which, based on how much online holiday shopping gets done in the modern age, might be the ex-holiday payroll effect we may have expected from the Retail industry.

Labor Force Participation remained steady at 63.2%, while the U-6 figure — often referred to as “real unemployment” — fell to an all-time record low of 6.7%. So whatever disappointment might be felt from this morning’s headline BLS number could be countered by this U-6 number.

Pre-market futures have melted from their highs prior to the employment release, but remain in positive territory: +25 on the Dow, +29 on the Nasdaq and +6 on the S&P 500. While the opening gains appear to be more modest, the continue to build on all-time market highs. Happy Friday!


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