U.S.: Labor market weaker than expected, and slowing

3 min
Dan North
Dan North Senior Economist for North America


The economy created +145k jobs in December, softer than expectations of +160k, and the prior two months were revised down a total of -14k. As a result the y/y rate of job growth fell to +1.4% from 1.82% last year. The labor market may be tight but it is surely slowing. Growth in hourly wages unexpectedly fell from +3.1% y/y to +2.9%, well off of the +3.4% peak set in February 2019. Temporary jobs, which are the first to be eliminated in a slowdown, are now shrinking at a -0.5% y/y rate. Manufacturing employment fell -12k, confirming all of the other contractionary manufacturing measures including the ISM, industrial production, and durable goods orders and shipments. Similarly, transportation, normally a leading sector of the economy, lost -10k jobs, confirming all of the other falling transportation indicators. More encouraging data showed that the unemployment rate was unchanged at 3.5%, the broader U-6 measure of unemployment hit a record (25-year) low of 6.7%, and the participation rate was unchanged at 63.2%.