US economy adds 145,000 new hires; unemployment stays at 3.5%
Friday, January 10, 2020
In December, U.S. nonfarm payrolls grew by 145,000 after November’s gain of 266,000, while the rate of unemployment remained at 3.5%, according to the Bureau of Labor Statistics. The total number of unemployed persons stayed at 5.8 million versus 6.3 million and a jobless rate of 3.9% a year ago.
In December, unemployment among major worker groups showed scant or no change compared with November’s data. The average workweek for all employees on private nonfarm payrolls remained at 34.4 hours in December, matching November’s numbers, according to the BLS.
In December, the number of long-term unemployed (without a job for 27 weeks or more) was 1.2 million, November’s total, accounting for 20.5% of those out of paid labor. Meanwhile, hourly pay increases are tepid.
“Year-over-year nominal wage growth was 2.9%—the lowest it’s been in 18 months,” according to Elise Gould, an economist with the Economic Policy Institute in Washington, D.C., in a statement. Historically, a low unemployment rate can spur higher wage growth. In that scenario, some employers hike starting pay to attract new employees. This has not been the case recently, though.
Thanks to legislation at the state level, nearly 7 million American workers will receive minimum wage pay hikes in 2020, according to David Cooper, an EPI economist. After the U.S. House of Representatives passed the “Raise the Wage Act of 2019” in July to increase the federal minimum wage of $7.25 an hour to $15 by 2025, the U.S. Senate has not moved to debate the bill. “Since the federal minimum wage was last raised in July, 2009, the minimum wage’s buying power has declined by 17 percent.” Cooper said.
In December, medium-sized business of 50-499 employees led the way in job creation with 88,000 new hires in December compared with 29,000 in November, according to the Automatic Data Processing National Employment Report, produced from ADP payroll data with Moody’s Analytics. New hires at small firms of 20-49 employees rose 69,000 in December versus 11,000 in November. Large firms of 500 or more employees hired 45,000 new employees in December versus November’s 27,000.
According to the ADP/Moody’s report, the service-providing sector added 173,000 new hires in December versus November’s 85,000. Meanwhile, the goods-producing sector gained 29,000 jobs in December after shedding 18,000 in November. In December, construction firms added 37,000 new hires after losing 6,000 in November. Manufacturing lost 7,000 jobs in December after shedding 6,000 in November.
“We saw expanded payrolls in December,” said Ahu Yildirmaz, vice president and co-head of the ADP Research Institute, in a statement. “The service providers posted the largest gain since April, driven mainly by professional and business services. Job creation was strong across companies of all sizes, led predominantly by midsized companies.”
The 12-member Federal Open Market Committee cut short-term interest rates three times in 2019 to boost the current expansion. Will the Fed stay that course in 2020?
Against that backdrop, tensions in the oil-rich Persian Gulf region are simmering. That and a presidential election are casting no small shadow of uncertainty for businesses and their customers in 2020.
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