U.S. Hiring at 2019 Finish Line Seen Right Around Decade Average
Reserve policy makers have consistently highlighted that the labor market remains strong and job gains have been solid.
(Bloomberg) --
The final jobs report for 2019 is projected to show payrolls growth capped the year with a gain almost exactly in line with the average of the decade-long economic expansion, and continuing to moderate from the 2018 pace.
The Labor Department report due at 8:30 a.m. Friday is forecast to show employers added 160,000 jobs in December, according to economists surveyed by Bloomberg. That would be fewer than November’s 266,000 but still enough to accommodate population growth and thereby hold down the unemployment rate. Private payrolls are forecast to rise 153,000 as the jobless rate holds at a half-century low of 3.5% and the annual pace of wage gains remained at 3.1%.
Though seasonal effects also could swing the data as the Thanksgiving holiday fell later on last year’s calendar, solid employment trends are broadly intact. Federal Reserve policy makers have consistently highlighted that the labor market remains strong and job gains have been solid, while signaling that interest rates will likely remain on hold through this year following three 2019 cuts.
The projected December payrolls gain would bring the 2019 total to 2.14 million, about a quarter-million above what economists expected a year ago. But that would also be the slowest gain since 2011 and down from 2.68 million in 2018.
Estimates in Bloomberg’s survey range from increases of 54,000 to 221,000. Forecasters expect a modest gain in manufacturing payrolls, which plunged then surged in the prior two months around the General Motors Co. strike.
Other reports this week showed jobless claims at a historically low level of 214,000 last week while ADP Research Institute data indicated private payrolls increased by 202,000. U.S. employers last month announced the fewest job cuts since July 2018.
Here’s what economists are saying, with payroll projections listed from low to high:
JPMorgan Chase
- 125,000 jobs, 3.5% unemployment, 3% annual wage growth
- “This would be one of the weakest months for job growth in recent years, but we think that this softness was due in part to seasonal issues and that job growth will pick up in January,” economist Daniel Silver wrote. “While there are only a few years from the past few decades in which Thanksgiving fell on Nov. 28 like it did this year, we see similarities in the labor-market data reported for these years with ‘late’ Thanksgivings.”
Wells Fargo
- 150,000 jobs, 3.5% unemployment, 3% annual wage growth
- “Secondary labor-market indicators continue to suggest a slower pace of hiring in 2020,” senior economist Sam Bullard wrote, noting fewer job openings and an easing in small-business hiring plans. “The tight labor market has led to stronger wages, though the pace of wage growth has slowed over the past year. With firms continuing to cite difficulty finding qualified workers, we expect employment costs to grow around their current pace this year.”
Capital Economics
- 150,000 jobs, 3.5% unemployment, 3.1% annual wage growth
- “A range of evidence suggests that prospects for the labor market remain solid heading into 2020,” wrote Michael Pearce, senior U.S. economist. “There’s no denying that hiring has regained momentum over recent months.”
NatWest Markets
- 185,000 jobs, 3.6% unemployment, 3% annual wage growth
- “In terms of the composition of payrolls in December, we suspect manufacturing payrolls probably fell back to a more trend-like pace of only 5,000 last month after the support received in November from the returning GM strike workers,” Kevin Cummins and Michelle Girard wrote. “Construction could have added around 10,000 jobs, although there may be some upside risk to this estimate especially given the warmer-than-usual temperatures across most of the country in December, as well as the fact that housing starts rose solidly (again) in November.”
Bloomberg Economics
- 205,000 jobs, 3.5% unemployment, 3.1% annual wage growth
- “December payrolls will provide a clearer perspective on the underlying hiring trend after the GM strike,” Carl Riccadonna, Yelena Shulyatyeva and Andrew Husby wrote in a note. “The data for the December report was collected during the week in which the U.S. and China reached a phase-one trade agreement; however, it is too early to see signs of a pickup in hiring in tariff-affected industries. As long as the trade truce holds and business sentiment begins to thaw, 2020 could see stronger job growth in manufacturing and some adjacent industries.”
Morgan Stanley
- 210,000 jobs, 3.5% unemployment, 3.05% annual wage growth
- “The combination of strong jobs, a steady rate of unemployment, and tame wage growth should reinforce the Fed’s judgment that monetary policy is in a good place,” chief U.S. economist Ellen Zentner wrote. “Headwinds to our December forecast come from slightly higher jobless claims in December, along with declines in the employment components of both ISM manufacturing and non-manufacturing surveys.”
--With assistance from Reade Pickert.
To contact the reporter on this story: Jeff Kearns in Washington at jkearns3@bloomberg.net
To contact the editors responsible for this story: Scott Lanman at slanman@bloomberg.net, Ana Monteiro, Vince Golle
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