Businesses hired a stunning 312,000 workers in December, capping off a year of robust economic growth, the Labor Department said Friday. Instead, employers added the highest number of jobs since February 2018, and the second-highest number of jobs added during any month of the Trump administration.
Data out this week have fanned fears that the nine-year economic expansion is running out of steam.
"This will be good news for otherwise depressed sentiment in the financial markets", said Sung Won Sohn, chief economist at SS Economics in Los Angeles.
US employers probably capped a strong year of hiring with a gain just short of the average pace in 2018.
Hiring last month was likely across all sectors.
Economists have forecast that the Labor Department will report that employers added a solid 180,000 jobs last month and that the unemployment rate stayed at a five-decade low of 3.7 per cent, according to the financial data firm FactSet. The ADP report, which is jointly developed with Moody's Analytics, was published ahead of the government's more comprehensive employment report for December scheduled for release on Friday. Average hourly pay was up 3.2% compared to a year earlier. The Dow Jones industrial average climbed roughly 450 points in morning trading, an increase of about 2 percent. The average work week rose 0.1 hour to 34.5 hours.
The unemployment rate nudged higher to 3.9%, but is still near historic lows. And attacks by Trump on the Federal Reserve over its rate increases have raised doubts about Chairman Jerome Powell's status - a concern for both the markets and the economy. The Fed last month forecast two rate hikes this year and signaled its tightening cycle is nearing an end in the face of financial market volatility and slowing global growth.
More broadly, the USA labor market is extraordinarily tight, leaving businesses reluctant to let workers go.
On Thursday, a gauge of factory activity in the USA fell by the most in a decade.
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USA stocks rallied on the employment report on Friday and extended gains after Powell's comments. The dollar dropped against a basket of currencies, while U.S. Treasury yields fell.
"This should, at least for today, mute expectations that the Fed is off the table completely this year", said Omair Sharif, a senior economist at Societe Generale in NY. There were 6.3 million people looking for a job in December, down from 6.5 million a year ago. The Labor Department has not been affected by the partial shutdown of the US government and will continue to publish economic data complied by its statistics agency, the Bureau of Labor Statistics.
The strong labor market suggests the economy will continued to expand this year despite the ebb in consumer confidence, continued weakness in the housing market as well as cooling manufacturing activity.
Goldman Sachs - 195,000 jobs, 3.7 percent unemployment, 3 percent annual wage growth.
Businesses are still searching for more workers. Anecdotal evidence has been growing of companies experiencing difficulties finding workers, and raising wages to retain and attract employees.
There are concerns that tightening financial market conditions because of the steep stock market sell-off could hurt hiring.
The big unknown is the partial federal government shutdown. A strong holiday shopping season is expected to have boosted retail employment while transportation and warehousing payrolls probably rose, driven by seasonal hiring. Employment in the leisure and hospitality sector increased by 55,000 jobs. Builders added 38,000 construction jobs, while manufacturers increased their payrolls by 32,000 workers.