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Fast Comment USStrong labour market; wage growth accelerates

  1. US economy adds 312,000 jobs in December
  2. Wage pressure building
  3. Outlook for 2019: slower employment growth, but continued tight labour market
US economy adds 312,000 jobs in December
Total non-farm payroll employment increased by 312,000 in December, more than the consensus expectation of 184,000. The strong print was further amplified by a total net revision of 58,000 for the previous two months. The underlying pace of employment growth of close to 200,000 per month is stronger than we would usually expect at this late stage in the economic cycle and well above the growth rate necessary to keep up with population growth. Despite strong employment growth, unemployment increased slightly, from 3.7 percent to 3.9 percent, as the labour force participation rate rose.
Wage pressure building
Wage increases have been slower than could be expected considering the continuing tightening of the labour market. Recently, however, wage growth has been picking up more markedly. In December, wage growth was 0.4 percent m-o-m, pushing the y-o-y increase up to 3.2 percent from 3.1 percent in November.
Outlook for 2019: slower employment growth, but continued tight labour market
As the impact of monetary tightening intensifies and fiscal stimulus fades, we expect employment growth to slow in 2019. The average monthly gain in payrolls could fall from close to 200,000 in 2018 to between 150,000 and 100,000 this year. In the second half of 2019, we expect employment growth to drop below labour force growth, resulting in a modest rebound in the unemployment rate. However, the labour market will continue to be tight, with historically low unemployment.

Anders Bergvall

Anders Bergvall

Senior Economist

Thematic analysis and USA

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