Washington. — US job growth slowed in November and monthly wages increased less than expected, suggesting some moderation in economic activity that could support expectations of fewer interest rate increases from the Federal Reserve in 2019.
The Labour Department’s closely watched monthly employment report on Friday came against a backdrop of a steep sell-off on Wall Street and a partial inversion of the US yield curve, which have stoked fears of a recession.
Stocks have been mostly hurt by uncertainty whether a 90-day truce agreed by US President Donald Trump and Chinese President Xi Jinping over the weekend will hold and lead to a lasting easing of trade tensions between the world’s two largest economies.
Non-farm payrolls increased by 155 000 jobs last month, with construction companies hiring the fewest workers in eight months, likely because of unseasonably chilly temperatures.
Some of the moderation in hiring in November could be the result of a shortage of qualified workers. But it also fits in with other data showing a rise in layoffs in recent weeks and a decline in a measure of services sector employment in November.
Data for September and October were revised to show 12 000 fewer jobs added than previously reported.
Economists polled by Reuters had forecast payrolls increasing by 200 000 jobs in November. The unemployment rate was unchanged at near a 49-year low of 3,7 percent. Average hourly earnings rose six cents, or 0,2 percent in November after gaining 0,1 percent in October.
That left the annual increase in wages at 3,1 percent, matching October’s jump, which was the biggest gain since April 2009.
Companies also reduced hours for workers. The average work week fell to 34,4 hours from 34,5 hours in October. The employment report could heighten fears about the economy’s health and lower the probability of the Fed raising interest rates more than once next year.
Financial markets are pricing in one rate hike from the Fed in 2019, compared with expectations for possibly two rate hikes a month earlier, according to CME Group’s FedWatch programme. The US central bank is expected to increase borrowing costs on December 18-19 for the fourth time this year.
Fed Chairman Jerome Powell last month appeared to signal the central bank’s three-year tightening cycle was drawing to a close, saying its policy rate was now “just below” estimates of a level that neither cools nor boosts a healthy economy. Minutes of the Fed’s November policy meeting published last week showed nearly all officials agreed another rate increase was “likely to be warranted fairly soon” but also opened debate on when to pause further hikes.
Wage gains were moderate despite online retail giant Amazon.com Inc (AMZN.O) raising its minimum wage to $15 per hour for US employees last month because of tightening labour market conditions.
Source: The Herald