U.S. job growth likely slowed in December, but the pace of hiring probably remains more than enough to keep the longest economic expansion in history on track despite a deepening downturn in a manufacturing sector stung by trade disputes.
Federal Reserve says economy and monetary policy are in a “good place”
That being said, it would extend the run of upbeat data such as consumer spending, trade and housing that have suggested the expansion, now in its 11th year, is not in immediate danger of being derailed by a recession.
Worries that a downturn might be triggered by the Trump administration’s trade war with China spurred the Fed to cut interest rates three times in 2019. Indeed economic growth did slow last year, throttling back to 2.1% in the third quarter from 2018’s pace of nearly 3%.
According to a Reuters survey of economists, nonfarm payrolls probably increased by 164,000 in December. Payrolls surged 266,000 in November, in part as 46,000 production workers at General Motors returned to work after a strike.
Some of the anticipated slowdown in December is attributed to seasonal volatility associated with a later-than-normal Thanksgiving Day.
The labor market has continued to produce a significant number of jobs, despite some informal evidence of worker shortages, which economists had feared would significantly restrain the whole hiring process.
Job growth averaged 180,000 each month through November, well above the roughly 100,000 monthly average needed to keep up with growth in the working-age population. December’s expected gains would lift total job growth for 2019 to more than 2 million, the ninth straight year above that threshold.
US-China trade war is taking its toll on the manufacturing industry
On the other hand, there are concerns the Labor Department’s Bureau of Labor Statistics (BLS), which compiles the employment data, may not be fully capturing the impact on payrolls of President Donald Trump’s 18-month-long trade war with China, which has pushed manufacturing into recession and led to company closures.
The government initially estimated last August that the economy created 501,000 fewer jobs in the 12 months through March 2019 than previously reported, the biggest downward revision in the level of employment in a decade. That suggests job growth over that period averaged around 170,000 per month instead of 210,000. The revised payrolls data will be published next month.
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