US jobs and wages up in latest employment report
The December 2018 US jobs report has record-breaking wage and job increases.
The US added 312,000 jobs in December 2018. Wages also increased to its highest number in 10 years. Wall Street has responded favorably on the strength of the news.
Job and wage strength despite markets
In December, the US economy added 312,000 jobs, exceeding expectations of financial experts. Industries like hospitality, retail, and education saw employment growth. Job seekers not only found employment but took home more money as well. Hourly wages surged by 3.2% and rose to its highest levels since 2009. The only downside to the account was that the unemployment rate grew to 3.9%. However, that’s possibly an indication that more US residents are more actively looking for employment.
Though December 2018 was the worst for the US stock market, this job report may mean good news for Wall Street in January 2019. The growth in wages will likely mean US residents will spend more, leading to increased consumer confidence. Financial experts like Lewis Alexander, analyst at Nomura, a financial services group, believe that the good news will alleviate volatility in the US markets.
‘We expect the December employment report to remind markets that the US growth outlook remains stable despite financial market volatility,’said Alexander.
However, another financial analyst, Mike Lowegart, head of investment at eTrade, think that the uptick on Wall Street will be temporary and won’t move the markets for long.
‘To be sure this is a good thing, but if the past few months are any indication, the market isn’t moving on fundamentals: Trade is the alpha and the omega',said Loewengart.
How jobs report affects the Fed
The positive employment report could affect the actions of US Federal Reserve Chair, Jerome Powell. The account will likely help prove his assertion that interest rate hikes are needed from the US central bank since the US economy is robust. It’s unclear how the Fed will or won’t be affected by the news. Economists like, Michael Gapen, from Barclays thinks that this may lead to more interest rate increases.
‘This should give the Fed some comfort that their assessment of the economy is correct and that they’re on track for further rate increases this year’, said Gapen.
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