Stock market responded positively Friday morning.
Economists expected 198,000 in November, but the economy only added 155,000. While expectations fell short, there’s some positivity within the report and stocks traded higher on Friday morning.
Experts told The Wall Street Journal that fears of a recession may have been overblown:
Friday’s jobs report shows that the market’s volatility and lingering uncertainty over the U.S. and China’s trade relationship hasn’t stopped businesses from hiring workers, said Chris Rupkey, chief financial economist and managing director at MUFG, in an email.
“This is the last monthly jobs report for this year and makes us more confident that 2019 will continue this long expansion from the recession,” Mr. Rupkey said. “The reality check is that jobs have never been so available, at least not in decades.”
The report has also eased worries about inflation:
Although the increase in jobs last month were short of estimates, some experts say the report still paints a picture of a U.S. economy that is humming.
Evidence of stronger inflation has renewed fears that the Federal Reserve will be forced to speed up interest-rate increases to fight off an overheating economy, but wages remained steady in November, easing inflation concerns.
“The key to these reports and their impact on the Fed is inflation, and while wages are continuing to show some strength I don’t think we’re hearing any alarm bells on that front,” Mike Loewengart, vice president of investment strategy at E*TRADE Financial Corporation, said in a note.
The unemployment rate remained steady at 3.7%, but the numbers in this area continue to slide down when divided among race and sex. The November numbers for unemployment among black men tied the “lowest reading on record.”
The less than expected jobs didn’t affect the number of jobs gained in 2018. This past year, jobs have grown by 1.7%.
Wages went up by 6 cents to $27.35. In 2018, wages have gone up a total of 81 cents (3.1%). However, weekly wages went down to 2.8% after it hit 3.4% in October.
Job participation remained at 62.9%. Areas that showed the most growth are the healthcare and manufacturing sectors:
The same sectors that have led hiring throughout the year continued to stand out last month, with health-care employers adding 32,000 jobs and manufacturers adding 27,000.
Transportation and warehousing companies and the professional and business services sector were also bright spots, while many other areas including mining and construction showed little change.
Those areas that slowed down a bit, including leisure and hospitality, could have been doing investors a favor. So far, analysts are largely saying today’s report is keeping expectations for a less aggressive Fed moving forward in tact.
Unfortunately, November is the worst month since March for construction. That sector only added 5,000 jobs. One expert said it’s due to a drop in home sales this fall.
Earlier this week, ADP Research Institute, a payroll processing company, reported that the private sector added 179,000 jobs. While it’s more than the Labor Department’s numbers, it’s still lower than the ADP number in October by 21%. The Washington Examiner stated that “Wall Street typically follows ADP’s figures closely, viewing them as a potential indicator of the Labor Department’s broader assessment.”
That looks to be the case because the stock market opened up to better numbers:
The Dow Jones Industrial Average rose 146 points, while the S&P 500 gained 0.4 percent. The Nasdaq Composite climbed 0.2 percent.
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