• Employment up 145,000 in December

• The unemployment rate held steady at 3.5%

• Wage growth slowed but still respectable 0.2% mom and 2.9% yoy

• Labor force participation rate unchanged at 63.2%

• A decent end to 2019 for US’s job market

The non-farm payrolls rose by a moderate 145,000 in December, slightly below consensus expectations for 160,000. That is a mild deceleration from November’s revised 256,000 tally. Hiring was revised down slightly (-14,000) over the OctoberNovember period. The increase in new jobs in November was trimmed by 10,000 to 256,000, while October’s tally was reduced by 4,000 to 152,000.

Most of the new jobs are being created in the large service side of the economy. Retailers created 41,000 jobs, hotels and restaurants boosted staff by 40,000 and the health-care industry added 28,000 workers. Construction companies hired 20,000 people and is likely to continue being a positive contributor given growing optimism in the housing market (NAHB home builder sentiment at record highs). The smaller goods-producing part of the economy has mostly treaded water. Manufacturers lost 12,000 jobs in December, putting the increase for the entire year at a meagre 46,000. There’s a continued concerned about the prospects for jobs here given the weakness in business surveys, such as the ISM. Energy producers also reduced employment as they cope with lower oil prices. Rounding it out, government employment rose 6,000.

Unemployment rate held steady at a cycle-low 3.5% in December – and the U6 rate that captures a broader range of underemployment like discouraged workers fell to a new cycle-low 6.7%, down from 6.9% in November and almost a full percentage point lower than a year ago. The labor force participation rate was unchanged at 63.2%. Meanwhile, wage growth disappointed. Average hourly earnings rose only 0.1% on the month, and are now up 2.9% yoy, a deceleration from 3.1% in November, marking the first month below 3.0% since July 2018.

Source: BIMB Securities Research - 13 Jan 2020