December Employment Situation


The final employment report of the year and the decade was a bit softer than expected, though the overall employment situation remains robust. Nonfarm payroll employment increased by 145,000, a bit less than expected, and the prior two months were revised down by a total of14,000 jobs. The rate of unemployment remained unchanged at 3.5%—its lowest level since the late 1960’s. Average hourly earnings for the last 12 months rose 2.9%. The labor force participation rate stayed at 63.2%, which is its best reading since, but it remains stubbornly below the 66% level seen prior to the 2008–09 recession.


This number is not likely to have much of an impact on equity markets beyond confirming that employment and the economy remain healthy. It is unlikely that this report will influence Federal Reserve policy in any direction.


There wasn’t really a big surprise. The Establishment Survey numbers were slightly weaker than expected, but with an economy almost at full employment, it’s not unusual to see low, small increases in payrolls for a given month. The one thing that we might expect to see going forward, and haven’t seen much of so far, is stronger increases in earnings. While earnings have been rising, there has been little pressure on wages given the level of unemployment.

The total number of jobs added to the economy in 2019 was 2.11 million, a slowdown from 2018’s 2.68 million. For the decade, employment rose 22.6 million, marking the greatest increase in the country’s history. This compares positively with a loss of 982,000 jobs in the prior decade as two recessions took their toll on job creation. The outlook remains strong at this time, and the market’s response should be generally positive.

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By: Benjamin Lavine