Economists React to the December Jobs Report: ‘No Cause for Alarm’

The U.S. economy added 148,000 jobs in December, below expectations, while the unemployment rate held steady at 4.1%. Here’s how economists and analysts reacted to Friday’s Labor Department report. “There’s no cause for alarm. Monthly payroll growth of 148,000 is still twice what we need to keep up with sluggish working-age population growth: the labor market still has plenty of momentum.” —Jed Kolko, Indeed “The job market is very healthy as 2018 begins. The solid economy will add about 140,000 jobs per month this year, well above the pace of the underlying growth in the labor force, so the unemployment rate will decline to 3.7% by year-end 2018.” —Stuart Hoffman, PNC Financial Services Group “The real litmus test of economic performance is now wage growth…While the widely reported average hourly earnings growth of 2.5% is lower than last year’s 2.9%, and only marginally above inflation rates, it’s worth noting that the increase of 0.34% from November to December represented the strongest wage growth across these two months since 2012.” —Ryan Bourne, Cato Institute “The rise in payrolls is much smaller than implied by the array of private sector surveys, all of which point to continued rapid gains, 200,000-plus, over the next few months. Accordingly, we are inclined to see this as noise rather than a shift in the trend.” —Ian Shepherdson, Pantheon Macroeconomics “It’s not a bad report, it doesn’t shatter the mosaic of data depicting a very solid economy, it’s just softer than we would have liked on the payroll headline.” —Dan North, Euler Hermes North America “The Fed will be pleased to see a 0.3% gain in average hourly earnings, although downward revisions to earlier months means that the annual growth rate only edged up to a still muted 2.5%, from 2.4%. Nevertheless, we anticipate a more marked acceleration in wage growth this year, with the annual rate climbing to 3% by end-2018.” —Paul Ashworth, Capital Economics “Strength in manufacturing shows the effects of a lower dollar and stronger growth overseas. And more manufacturing jobs often indicates strength in other areas of the economy, such as equipment sales. Often a manufacturing revival happens earlier in an expansion, so this indicates the expansion has plenty of life.” —Robert Frick, Navy Federal Credit Union RELATED U.S. Employers Slow Pace of Hiring in December December Jobs Report: The Numbers U.S. Jobless Claims Rose Last Week (Jan. 4)

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