US job additions in December
The US (IVV) (QQQ) non-farm payrolls were at 312,000 for December, which beat economists’ consensus of 180,000 by a huge margin. The major gains in December were led by healthcare, restaurants and bars, construction, and manufacturing.
October’s non-farm payrolls were revised to 274,000 from 237,000 previously. November’s non-farm payrolls were revised higher by 21,000 to 176,000.
Economists’ expectations for January
After last month’s strong job additions, economists expect the payrolls to be at 165,000, which is lower than the average of 206,000 new job additions during 2018. Since the government shutdown ended, government workers will be included in the payrolls. However, contractors might be impacted. The report should give a clearer picture of how the shutdown impacted the job markets.
The unemployment rate increased to 3.9% in December from 3.7% in November. However, the increase doesn’t signal any negative news. The rate increased as more workers joined the workforce. The labor force participation rate increased to 63.1% from 62.9% in November.
For January, economists expect the unemployment rate to remain steady at 3.9%, which is still close to the 50-year low. If the rate comes in at this level, it shouldn’t have much of an impact on markets (SPY) (VTI).
The market shouldn’t be too concerned about unemployment data, which are already running at a multiyear low. A slight uptick in the unemployment level due to the increased labor force participation rate would be positive for the economy (VOO). The increase would imply that people who stopped actively looking for jobs are entering the job market again.