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U.S. employment surges in December


December’s huge declines in the stock market rattled confidence in the U.S. economy and raised recession fears, but an especially strong federal jobs report released Friday bodes well for the mortgage and housing industries.

The U.S. added 312,000 jobs over the month, the U.S. Bureau of Labor Statistics reported. The unemployment rate held under 4 percent for the sixth consecutive month, even as thousands of Americans returned to the workforce and starting looking for jobs.

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“The labor market ended the year on a stellar note, which should help soothe fears of a marked slowdown in the economy,” Fannie Mae Chief Economist Doug Duncan said. “Robust December hiring, plus upward revisions in the prior two months, pushed the three-month average job gain to the strongest pace since September 2016, not too shabby for an expansion that is long in the tooth.”

The unemployment rate ticked up 20 basis points, to 3.9 percent, from a near 50-year low of 3.7 percent in November, but that increase was due to an expansion of the civilian workforce, which is another positive trend. Some 419,000 more people either began working or were actively looking for jobs in December, the agency reported. Hourly wages rose 11 cents, to $27.48. The monthly bump in wages was the most since the recovery, Duncan said.

Duncan noted one sour note in the report: Residential-construction hiring was flat. The construction industry added 38,000 jobs in December, but the majority of the hiring was outside of the residential construction trades.

“Whereas overall hiring and wage growth remain solid, the number of jobs in residential construction barely budged over the month, suggesting that the prolonged housing-supply crunch will continue into the new year,” Duncan said.

Aside from a seasonal uptick in retail jobs and hiring at restaurants and bars, thousands of jobs were added in manufacturing (up 32,000); professional and business services (43,000); and health care (50,000).  

The job additions in November and October also were revised upward, to 176,000 and 274,000, respectively. This was 58,000 more than previously estimated.

The report had an immediate impact on the markets, which plunged for most of December. Following the release, Fed Chair Jerome Powell hinted that policymakers would be patient and watch to see how the economy evolves. The Dow Jones Industrial Average was up by more than 800 points at midday. 

“Every aspect of the December jobs report was strong: more jobs, more people looking for work, and the fastest wage growth since 2009,” said Mike Fratantoni, chief economist for the Mortgage Bankers Association. He noted the “remarkably strong” average job gains of 254,000 over the past three months. 

“With mortgage rates about a half point lower than late last year, the Fed likely to move more slowly going forward and home-price growth slowing a bit, today’s report points to a still-strong job market that should support a solid spring housing market in 2019,” Fratantoni said.  


 

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