- Employment up 145k in December
- The unemployment rate held steady at the cycle-low 3.5%
- Wage growth slowed, but still respectable at 2.9%
The headline job gain was a touch below market expectations, and down from a 194k average increase over the prior 6 months. Still, the 145k increase in December is an above-trend pace that would, over time, put further downward pressure on the unemployment rate. That rate held steady at a cycle-low 3.5% in December – and the U6 rate that captures a broader range of underemployment like discouraged workers fell to a new cycle-low 6.7%, down from 6.9% in November and almost a full percentage point lower than a year ago. Wage growth softened to 2.9%, marking the first month below 3% since July 2018, but what ostensibly look like very tight labour markets should put a floor under that measure in the near-term.
We expect that the pace of employment growth will continue to lose some momentum this year, outside of likely volatility in headline job counts tied to the 2020 census. But that is due more to ‘supply-side’ issues (weak growth in the working age population and the fact unemployment is already very low) than near-term domestic or external demand concerns. Indeed, the near-term growth backdrop looks somewhat more favourable than it did a few months ago with US/China trade tensions easing, at least modestly, late last year.
