US December Job Creation Beats Expectations
Just for a change, I thought you might appreciate some good news – well nominally good news at any rate. The US job creation figure for December has come in at nearly twice the level anticipated by analysts: 312000 against expectations of 177000. However, despite this strong level of performance, unemployment in the USA has edged slightly higher to 3.9%.
Many economists regard an unemployment level of 5% as being effective full employment. Once a nation hits “full employment” then wages should increase as employers have to offer better terms to attract workers from a dwindling pool of supply. US wage inflation for December was only marginally up on the November level at 3.2% compared to 3.1% (both annualised figures), so there is little sign of significant wage inflation generally in the US economy yet. Currently, US inflation is at 2.2% so the modest increase in wages ought to boost disposable income for American workers. A possible explanation for the relatively week wages growth is that many Americans are looking to move from part-time to full employment positions or to move from precarious “gig-economy” jobs to more traditional roles. In other words the headline unemployment figure is being distorted by low quality, low hours jobs.
To be considered as unemployed, a person needs to be registered as unemployed and actively seeking work.
The number of Americans in full time employment stands at a fraction under 130 million, a labour force participation rate of 63.1%.
The December job creation figures saw gains in health care, the food and drink sector, manufacturing, construction and retail trade sectors, particularly.
The December job creation data was credited with giving the US stock market a much needed shot in the arm after a bruising Q4. The Dow Jones Industrial average rose by 3.3%; the S&P 500 made 3.4%; and the Nasdaq composite index put on 4.2% when the data was released (Friday).