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Real Time Economics: Solid Jobs, Troubling Undertone

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Real Time Economics: Solid Jobs, Troubling Undertone

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U.S. employers added 155,000 jobs in November, less than anticipated, and the unemployment rate held at 3.7 percent.

This is Greg Ip, the WSJ’s chief economics commentator, to take you through rsquo & today jobs report.

CAUTION SIGNS

Job expansion, at 155,000, in November was powerful by any standard. It fell short of those 198,000 economists anticipated and the average, at 170,000, has been the lowest annually. It’s a remarkable indication of economic deceleration. There have been signs of this in rising claims for unemployment insurance, slumping housing action, and in markets: stocks are grinding reduced and also the bond yield curve is still nearing an “inversion,” a popular top indicator of recession. Macroeconomic Advisers has marked their prediction for current-quarter expansion down from 3 percent in September to 2.3% today. For the time being, it’s consistent with a market slowing into a more sustainable rate, but also the dissipating momentum raises caution flags.

KEY THEMES

RECESSION? NOT YET BUT WATCH THIS SPACE

A recession can’t be ignored, although this is appears more like a recession. J.P. Morgan puts the odds of recession beginning in the next 12 months at 35% depending on the latest economic data, 42% based on monetary markets, and 41 percent depending on the yield curve.  Don’t require much comfort from the fact occupation is increasing; when a recession is under way, it turns negative.  Before all the recessions began, job growth has been comparable to where it is now.

RATE HIKE STILL ON FOR DECEMBER, CAUTION THEREAFTER

Stock index futures and bond returns originally slipped on the information. In 11:30 300, the Dow was down over 300 points and the 10 year Treasury yield hovered near Thursday’s close of 2.89 percent.  The jobs data should keep the Federal Reserve on track to boost interest rates at its Dec. 19 meeting and continue toward a careful approach to speed rises next year, Nick Timiraos reports.  The work gain readily exceeded the 100,000 speed needed to match expansion of the working age people, and has been spread across industries. Fed officials want slow hiring to get unemployment to stabilize near its current 3.7percent –in September, that’s where they thought it would end the year. This would tamp down anxieties of unsustainable growth and overheating.

DISAPPOINTING DETAILS

The projects report’s particulars were unsatisfactory. Prior months’ job gains were revised by 12,000. Hourly earnings rose just 0.22%, less than anticipated. However, they were up 3.1% from a year before, the first time in nine years the yearly increase topped 3 percent for 2 straight months. The broader U-6 “underemployment speed ” climbed to 7.6% from 7.4 percent.  The labor-force participation rate–those working or searching for work–kept steady at 62.9 percent, just modestly above multidecade lows touched in 2015, Eric Morath and Paul Kiernan report.

WHAT ECONOMISTS ARE SAYING

Bank of America Merrill Lynch: “Some of those softening probably owes to reversion to the tendency as October’s project gains were boosted by employees returning back to work following hurricanes affected employment action from the South in September. ” Barclays: “November was fairly cold relative to adverse and ordinary weather seemed to slow labor in leisure and hospitality and building …weather could have taken about 25k off of November employment. ” Capital Economics: “Economic growth is slowing down towards its rate. There is nothing here to indicate somewhat more abrupt recession is being suffered by the economy. ” Oxford Economics: &ldquoWe expect payrolls to moderate in 2019 to a more pace as downturn slowly cools. This ought to continue to pressure the unemployment rate reduced towards 3.5% by the end of 2019 and keep upward pressure on wage growth. ”

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