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The US Labor Department November jobs report on Friday reported a much higher than expected 266k v 180k non farm payroll additions.  The US added 54,000 manufacturing jobs. Unemployment stayed stayed at 3.5% the lowest since December 1969.

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November 2019 U.S. Employment Report

The Fed Chair Powell came out with a more dovish tone as expected at the last FOMC cutting rates following market fatigue from the trade wars and the resultant uncertainty. There has been an ongoing campaign by US Presdent Trump calling for lower rates and criticising the Federal Reserve for raising in the past year.  Federal Reserve President Powell and other Fed Governors have admitted they are unsure of the path for wages and inflation. In February American wages hit their highest levels in a decade at 3.4%, but has fallen back to3.1% in Novemeber, but up from October.

The market expected the November report released Friday to see nonfarm payrolls rise in line with longer-run trends in monthly employment growth at a consensus of 185,000 new jobs, recovered from the GM strike. Last month it came in  lower but revised higher at 180,000. Logic suggests a return to the mean after the volatility in the hiring data. The wages data gives us indications of the FOMC plans on rates into 2019 and 2020. Unemployment is near a 49 year low with higher participation and the two month NFP revision was +41,000 change to jobs last month.

However, the combination of weaker PMI readings and skill shortages amid a low unemployment rate of 3.7% pose downside risks. More important could be the earnings data, which missed expectations in April and May. Any further cooling of pay growth would raise the odds of the FOMC’s next policy change being a rate cut.

US Jobs November 2019 


Employment:

  • Non-farm payrolls +266k vs +185K expected, Prior 180K (revised from 136 K)
  • Unemployment rate 3.5% vs 3.6% expected/prior
  • Participation rate 63.2% vs 63.3% expected.prior (63.3% highest since 2014)
  • Underemployment rate 6.9% vs 7.0 % prior
  • Two month net revision +41k vs Prior +95K
  • Manufacturing payrolls +54k vs +40k expected, -36k Prior & '55k expected (April was first loss since Oct 2016)
  • Private payrolls +254k vs 178k expected, 80K Prior

Wages:

  • Average hourly earnings +0.02% m/m v +0.3% m/m Prior/Expected
  • Average hourly earnings +3.1% y/y vs 2.9% exp, Prior y/y
  • Average weekly hours  34.4 v 34.4 exp  Prior 34.4

 

 US Jobs Nov 2019 Earnings by Industry

Household Survey Data

Both the unemployment rate, at 3.5 percent, and the number of unemployed persons, at 5.8 million, changed little in November. Among the major worker groups, the unemployment rates for adult men (3.2 percent), adult women (3.2 percent), teenagers (12.0 percent), Whites (3.2 percent), Blacks (5.5 percent), Asians (2.6 percent), and Hispanics (4.2 percent) showed little or no change in November.

The number of long-term unemployed (those jobless for 27 weeks or more), at 1.2 million, was essentially unchanged in November and accounted for 20.8 percent of the unemployed.

The labor force participation rate was little changed at 63.2 percent in November. Theemployment-population ratio was 61.0 percent for the third consecutive month.

The number of persons employed part time for economic reasons, at 4.3 million, changed little in November. These individuals, who would have preferred full-time employment, were working part time because their hours had been reduced or they were unable to find full-time jobs.

In November, 1.2 million persons were marginally attached to the labor force, down by 432,000 from a year earlier. (Data are not seasonally adjusted.) These individuals were not in the labor force, wanted and were available for work, and had looked for a job sometime in the prior 12 months. They were not counted as unemployed because they had not searched for work in the 4 weeks preceding the survey.

Among the marginally attached, there were 325,000 discouraged workers in November, down by 128,000 from a year earlier. (Data are not seasonally adjusted.) Discouraged workers are persons not currently looking for work because they believe no jobs are available for them. The remaining 921,000 persons marginally attached to the labor force in November had not searched for work for reasons such as school attendance or family responsibilities

US Jobs Nov 2019 Industry

Establishment Survey Data

Total nonfarm payroll employment rose by 266,000 in November. Job growth has averaged 180,000 per month thus far in 2019, compared with an average monthly gain of 223,000 in 2018. In November, notable job gains occurred in health care and in professional and technical services. Employment also increased in manufacturing, reflecting the return of workers from a strike. Employment continued to trend up in leisure and hospitality, transportation and warehousing, and financial activities, while mining lost jobs. 

In November, health care added 45,000 jobs, following little employment change in October (+12,000). The November job gains occurred in ambulatory health care services (+34,000) and in hospitals (+10,000). Health care has added 414,000 jobs over the last 12 months. Employment in professional and technical services increased by 31,000 in November and by 278,000 over the last 12 months. Manufacturing employment rose by 54,000 in November, following a decline of 43,000 in the prior month. Within manufacturing, employment in motor vehicles and parts was up by 41,000 in November, reflecting the return of workers who were on strike in October. In November, employment in leisure and hospitality continued to trend up (+45,000). The industry has added 219,000 jobs over the last 4 months.

Employment in transportation and warehousing continued on an upward trend in November (+16,000). Within the industry, job gains occurred in warehousing and storage (+8,000) and in couriers and messengers (+5,000). Financial activities employment also continued to trend up in November (+13,000), with a gain of 7,000 in credit intermediation and related activities.

Financial activities has added 116,000 jobs over the last 12 months. Mining lost jobs in November (-7,000), largely in support activities for mining (-6,000). Mining employment is down by 19,000 since a recent peak in May. In November, employment in retail trade was about unchanged (+2,000). Within the industry, employment rose in general merchandise stores (+22,000) and in motor vehicle and parts dealers (+8,000), while clothing and clothing accessories stores lost jobs (-18,000).

Employment in other major industries—including construction, wholesale trade, information, and government—showed little change over the month. In November, average hourly earnings for all employees on private nonfarm payrolls rose by 7 cents to $28.29. Over the last 12 months, average hourly earnings have increased by 3.1 percent. In November, average hourly earnings of private-sector production and nonsupervisory employees rose by 7 cents to $23.83.

The average workweek for all employees on private nonfarm payrolls was unchanged at 34.4 hours in November. In manufacturing, the average workweek increased by 0.1 hour to 40.5 hours, while overtime decreased by 0.1 hour to 3.1 hours. The average workweek of private-sector production and nonsupervisory employees held at 33.5 hours. (See tables B-2 and B-7.) The change in total nonfarm payroll employment for September was revised up by 13,000 from +180,000 to +193,000, and the change for October was revised up by 28,000 from +128,000 to +156,000. With these revisions, employment gains in September and October combined were 41,000 more than previously reported. (Monthly revisions result from additional reports received from businesses and government agencies since the last published estimates and from the recalculation of seasonal factors.) After revisions, job gains have averaged 205,000 over the last 3 months.

The Employment Situation for December is scheduled to be released on Friday, January 10, 2020,

 

Source: AFP, Challanger, DOL, TradersCommunity Data, BLS

From The TraderCommunity Research Desk

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