Dow Surges as Jobs Report Shows Economy Still Strong
The U.S. added a seasonally adjusted 266,000 jobs in November and unemployment rate fell, according to the Labor Department’s November 2019 Jobs Report. Donald Trump tweeted his praise.
The U.S. added a seasonally adjusted 266,000 jobs in November and unemployment rate fell, according to the Labor Department’s November 2019 Jobs Report.
The job market boomed in November, allaying concerns of a sputtering economy and likely leaving the Federal Reserve on hold for the foreseeable future. Stocks surged on the report.
U.S. employers added a seasonally adjusted 266,000 jobs in November, the Labor Department said Friday, well above the 180,000 economists polled by Bloomberg had expected. An upward revision to the previous month’s number—156,000 jobs were added in October, versus a previously-reported 128,000—made the strong report look even better.
Investors cheered the latest jobs data and the stock market surged. The S&P 500 rose 28 points, or 0.9%, Friday. The Dow Jones Industrial Average gained 337 points, or 1.2%.
November payrolls were helped by the return to work of striking General Motors (ticker: GM) workers. But even backing out some 45,000 returning workers—which don’t represent new jobs—payrolls still grew a robust 221,000 or so last month.
As employers picked up hiring, the unemployment rate fell back to a 50-year low of 3.5%. Economists expected unemployment to hold steady at 3.6%. A small dip in the labor-force participation rate, which measures the number of people available for work as a percentage of the total population, contributed to the decline in the unemployment rate.
The inflation component of the report showed a bit of progress the Fed desires in wage gains without being strong enough to stoke inflation fears. From a year earlier, wages grew 3.1%, more than the 3% economists expected. That’s as the October increase was revised higher to 3.2% from an originally reported 3%. The upticks suggest employers are starting to pay a bit more to hire in the tight labor market.
Taken together, the data support expectations that the Fed will remain on hold when it meets next week.
Fed Chairman Jerome Powell in November told Congress’s Joint Economic Committee that “We see the current stance of monetary policy as likely to remain appropriate as long as incoming information about the economy remains broadly consistent with our outlook of moderate economic growth, a strong labor market” and stable inflation. There is nothing in the November jobs report would seem to undermine that view.
The report is “a strong read on the jobs market almost no matter how one slices the data,” said Jon Hill of BMO Capital Markets. “That the Fed’s not cutting in December was already certain; we’d also make the point that the FOMC isn’t hiking anytime soon until labor market strength bleeds over into sustained above target inflation,” he said.
The report goes a long way, at least for now, in relieving concerns that the trade war and impact on business—especially in the manufacturing sector—would cool the economy enough to prompt recession. So long as job growth remains solid, consumer spending should continue to offset weakness in other parts of the economy.
“Along with the upward revisions to earlier months, these numbers are telling us that job growth in the U.S. has stabilized,” said Brian Coulton, chief economist at Fitch Ratings.
“The level of employment has been growing at 1.5% year on year for 6 months in a row now,” Coutlon notes. “This highlights that conditions remain firmly in place for the consumer and the service sector to cushion the economy from external risks and related weakness in U.S. manufacturing.”
The report was celebrated by President Donald Trump, who tweeted out his thoughts after it was released: “GREAT JOBS REPORT!”
Stock Markets Up Record Numbers. For this year alone, Dow up 18.65%, S&P up 24.36%, Nasdaq Composite up 29.17%. “It’s the economy, stupid.”
— Donald J. Trump (@realDonaldTrump) December 6, 2019
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