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The US economy added 145,000 jobs in December vs. 160,000 expected, while the rate of unemployment remained at the 10-year low of 3.5% as expected. Growth in wages slowed on a monthly and annual basis.

Key Takeaways

• Nonfarm payrolls grew 145,000 vs. 160,000 jobs expected in December, and November growth was revised downward by 10,000 to 256,000.
• The rate of unemployment remained unchanged from November’s 3.5%, in line with expectations.
• Average hourly earnings grew 2.9% annually vs. 3.1% expected and compared to 3.1% in November.

The jobs report saw downward revisions to the previous two months. October gains were revised down by 4,000 to 152,000, and November gains were revised down by 10,000 to 256,000. December payrolls were expected to slow down in December after being stimulated the month before by the end of a General Motors strike which saw tens of thousands return to work. However, even accounting for the strike, November figures appear to be above yearly trends, with only 39,300 of the 256,000 jobs added because of the strike agreement.

Growth last month came mostly in services. Retail trade saw 41,200 new jobs in December compared to a drop of 14,100 the month before. Education and health services added 36,000 positions, down from double that figure in November. Goods-producing industries added 52,000 in November and lost 1,000 in December. Manufacturing lost 12,000 after gaining 58,000 the month before. Overall, the manufacturing industry saw a net gain of just 46,000 jobs in 2019 compared to 264,000 the year before, as the US/China trade war escalated dramatically last year with billions of dollars in tariffs on both sides.

December jobs data out this morning.

The MoM nonfarm payroll number missed expectations (145k vs 160k expected)

Bigger picture, YOY growth in nonfarm payrolls has decelerated to just 1.4%. pic.twitter.com/Al84sdQU7o

— Seeking Alpha, Finding Beta (@CantFindAlpha) January 10, 2020

The unemployment rate remains near historic lows at 3.5%, but this has not necessarily resulted in solid earnings throughout the labor market. December wage gains saw just 2.9% growth, over a yearly low and below expectations of 3.1%. Job growth in 2019 totaled at 2.1 million and saw an average of 176,000 per month, the slowest pace of growth since 2011. Just one year prior in 2018, job growth averaged at 227,000 per month. However, a separate measure including discouraged and underemployed workers hit historic lows at 6.7%, the lowest since records began. Labor force participation remains steady at 63.2%, and the workforce rose 209,000 to 164.6 million.

Market Reaction

Gold prices have seen upward momentum following the report, although still remain down on the day. Spot gold last traded at $1,554.06/oz, up 0.15% with a high of $1,556.28/oz and a low of $1,545.85/oz. The price of gold saw losses overnight on the news that the US and Iran were backing away from any imminent military confrontation.