trending Market Intelligence /marketintelligence/en/news-insights/trending/a2dvf8QE_PNE5XczOofcxQ2 content esgSubNav
In This List

US economy adds fewer jobs than expected; wage growth slowest since July 2018


Insight Weekly: Bank oversight steps up; auto insurers’ dismal year; VC investment slumps


Banking Essentials Newsletter: 3rd May Edition


Banking Essentials Newsletter: 19th April Edition


According to Market Intelligence, April 2023

US economy adds fewer jobs than expected; wage growth slowest since July 2018

The U.S. job market added fewer jobs than expected in December 2019 while annual wage growth fell to its lowest level in 17 months, data from the U.S. Bureau of Labor Statistics showed.

Total nonfarm payroll employment in the U.S. grew by 145,000 in December 2019, missing the consensus forecast of economists polled by Econoday for 158,000 additional jobs.

Job gains in November 2019 were revised down to 256,000 from 266,000 while employment figures for October 2019 were revised down to 152,000 from 156,000.

Most of the job gains were in retail trade and healthcare, while mining lost jobs in December 2019. Manufacturing employment declined by 12,000.

SNL Image

Ryan Sweet, director of real-time analytics for Moody's Analytics, told S&P Global Market Intelligence that the weaker-than-expected nonfarm employment figures are a bit misleading due to retail adding 40,000 jobs last month, the largest in nearly three years. Sweet said the gain in retail is not sustainable, and that a decline in transportation and warehousing employment was unexpected amid the shift to online shopping.

"A late Thanksgiving likely juiced retail by pushing some hiring from November into December," Sweet said.

Average hourly earnings rose 2.9% on a yearly basis, coming in below prior month's growth and market expectations of a 3.1% annual increase. This marked the slowest pace of wage growth since the 2.8% annual increase in July 2018.

"The clear disappointment is wages," James Knightley, chief international economist for ING Economics, said in a note. "Despite all the talk of a tight jobs market and companies struggling for staff with the right skill sets there is little evidence of labor costs being bid higher."

Jim O'Sullivan, the chief U.S. macro strategist for TD Securities, said in a note that U.S. payrolls were weaker than generally expected, but the trend still looks fairly strong through the volatility. Calling the December report "modestly disappointing," he is more focused on hourly earnings. "Those data are also volatile but previous upward momentum seems to have at least temporarily faded," O'Sullivan said.

The unemployment rate stood at 3.5% last month, in line with the Econoday consensus forecast. Meanwhile, the labor force participation rate remained unchanged at 63.2% in December 2019.

SNL Image

Stocks reacted modestly to the December jobs report. The S&P 500 was up nearly 0.2% as of 11:15 a.m. ET, while the Dow Jones Industrial Average was trading 0.2% lower.

The December 2019 jobs report comes on the heels of smashing payroll data for the previous month that largely tempered fears of a looming recession and another interest rate cut by the Federal Reserve. Fed officials displayed some cautious optimism about U.S. economic prospects on Jan. 9, showing no rush to change interest rates again after their three rate cuts in 2019.

"Fed policymakers likely won't be changing policy anytime soon," Jay Bryson, acting chief economist for Wells Fargo Securities, said in a note.

Sweet agreed, saying that the less-than-impressive job growth in December 2019 would not cause the Fed to reconsider its plans to keep interest rates unchanged in 2020.