A strong jobs report could provide reassurance on economy

Donald Trump appeared to reach out to Democrats to end the US government shutdown which is now in its second week

Jobless Claims Climbed in Last Week of 2018 AFP3 Jan 2019

Initial jobless claims, a proxy for layoffs across the US, increased by 10,000 to a seasonally adjusted 231,000 in the week ended December 29, the Labor Department said Thursday.

Major stock market indexes, which have seen massive swings in recent weeks, rebounded Friday morning after the labor report was released.

Payroll processor ADP said Thursday that private businesses added a robust 271,000 jobs in December, a sign that companies expect decent growth to continue despite the overhang of risks. Builders added 38,000 construction jobs, while manufacturers increased their payrolls by 32,000 workers.

The unemployment rate rose because more than 400,000 people joined the labor force looking for jobs.

Average hourly earnings are seen rising 0.3% in December after gaining 0.2% in November.

The strong job growth suggests employers believe USA consumer spending will stay robust.

210,000 jobs, 3.6 percent unemployment, 3 percent annual wage growth "The pace of job creation in December was likely immune to the market sell-off and intensifying political uncertainty", economists Yelena Shulyatyeva, Tim Mahedy and Carl Riccadonna wrote.

"Overall, the markets may have decided the Fed's work is done, but the economic data say otherwise", said Ashworth. Still, growth is likely to slow as the stimulus from last year's tax cuts wane.

Jobless claims increased to 231,000 in the week ended December 29, above the 220,000 median estimate of economists, Labor Department figures showed Thursday. Last week included Christmas and preceded New Year's Day.

The Labor Department has not been affected by the partial shutdown of the US government and will continue to publish economic data complied by its statistics agency, the Bureau of Labor Statistics.

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USA employers added 312,000 jobs in December, well above what economists expected and underlining that the American economy remains strong despite recent market turbulence.

Data releases from Census Bureau and Bureau of Economic Analysis have been suspended during the shutdown, which started on December 22 amid demands by Trump for $5 billion in funding for a wall on the U.S. -Mexico border.

"Strong job gains coupled with rising wages should act as a tailwind for consumption", said Michelle Meyer, chief economist at Bank of America Merrill Lynch in NY.

A month earlier, wages grew 0.2 percent. Economists estimate that it requires roughly 100,000 job gains each month to satisfy population growth and keep the unemployment rate at its current level. For all of 2018, construction jobs were up 280,000.

And businesses are still searching for more workers. Anecdotal evidence has been growing of companies experiencing difficulties finding workers, and raising wages to retain and attract employees.

The Institute for Supply Management (ISM) survey published on Thursday offered a downbeat assessment of the manufacturing sector, with nearly all components declining last month.

Data this week showed factory activity weakened across much of Europe and Asia in December, with Chinese manufacturing contracting for the first time in 19 months.

The big unknown is the partial federal government shutdown. Retailers hired 23,800 more workers. Employment in the leisure and hospitality sector increased by 55,000 jobs.

Jobs in health care increased by 50,000 last month, with most of the employment centered around ambulatory care and hospitals. The health and education sector added 82,000 positions.

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