Economic Indicators

Hiring Slows as Wages Grow, the trade deficit has widened and concerns over global growth are mounting

After robust growth in the middle of the year, the economy has been flashing mixed signals of late. Equity markets are well down from early October and yields on U.S. Treasury bonds have fallen, indications of diminished investor expectations for growth and inflation.

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U.S. employers slowed their hiring in November, but wage growth matched the highest rate in nearly a decade and unemployment held at its lowest level in nearly half a century, signs of a strong economy that could be losing some momentum at the end of a banner year.

Nonfarm payrolls increased a seasonally adjusted 155,000 in November and averaged growth of 170,000 a month over the past three months. It was the slowest three-month growth rate in a year but continued a record-setting streak of 98 straight months of job gains.


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After robust growth in the middle of the year, the economy has been flashing mixed signals of late. Equity markets are well down from early October and yields on U.S. Treasury bonds have fallen, indications of diminished investor expectations for growth and inflation. Business investment data have softened, the trade deficit has widened and concerns over global growth are mounting.

At the same time, however, the big driver of the U.S. economy—consumer spending—remains strong, supported in large part by improved wages and low unemployment. The unemployment rate held at 3.7% last month, matching the lowest rate since December 1969, and year-over-year wage growth matched the prior month’s 3.1% pace as the best rate since 2009. With oil prices falling and inflation softening recently, households are keeping more of what they earn.

“The economy is slowing and hiring is going to slow with it,” said Joe Brusuelas, chief economist at consulting firm RSM US. “Business activity remains stout, but we are seeing some cracks.” He pointed to supply-chain disruptions due to the trade dispute with China and a sluggish housing market.

“A recession is not imminent,” Mr. Brusuelas said. “We’re seeing a gross overreaction to growth sliding below 3%. Given our long-term trend, 2.4% would be a good rate of growth next year.”

Stocks retreated after initially rising on the jobs report. Slower growth disappoints investors because it means less corporate profits, but there was a silver lining because slower growth also diminishes the Federal Reserve’s sense of urgency about raising short-term interest rates.

The Fed is widely expected to raise rates by a quarter percentage point at its next meeting in December. After that, officials are expected to proceed cautiously, tying rate decisions in 2019 closely to economic data.

The modest job-growth slowdown could be a sign of slightly softer demand for goods and services by consumers. For some companies, hiring also might be slowing because they can’t find the workers they need because unemployment is so low.

The economy churned out 220,000 new jobs a month during the first eight months of the year, a pace many economists didn’t think was sustainable with workers already so scarce. “The 200,000 pace of job growth we’ve had this year is unrealistic going forward,” said Joao Gomes, a finance professor at the Wharton School of the University of Pennsylvania.

Friday’s report showed the pace of hiring increased last month in the retail, transportation and warehousing and manufacturing sectors. Manufacturers have added nearly 300,000 jobs in the past year, trending at the best growth rates since the mid-1990s, suggesting trade skirmishes have not yet impacted many jobs in that sector.

But payrolls rose more slowly in construction last month, which had been another source of strength this year, and fell in the mining sector, which is tied to oil output. Government payrolls fell 6,000 in November.

Average hourly earnings for all private-sector workers increased 6 cents last month to $27.35. It is the second-straight month hourly wages rose better than 3% from a year earlier. That had not previously occurred since the recession ended more than nine years ago. However, the average workweek was slightly shorter, causing weekly wages to decline on the month.

A broader measure of unemployment, including those too discouraged to look for work, plus Americans stuck in part-time jobs but who want to work full-time, rose to 7.6% from 7.4% the prior month. The rate, known as the U-6, has trended this year at the lowest level in 18 years. But it remains slightly above the rate recorded last time the headline unemployment rate stayed near 4%, suggesting there may be some slack in corners of the labor market.

While unemployment is historically low, the labor-force participation rate is only modestly above multidecade lows touched in 2015. The share of American adults working or looking for work held at 62.9%. Separate Labor Department data showed the number of unfilled jobs reached a high this summer.


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A Fed report released Wednesday showed that in more than half of the central bank’s 12 districts, businesses reported labor shortages. In the Chicago region, a number of firms said they had been “ghosted” by employees, meaning workers stop arriving without notice and become impossible to contact. The White House played down the slower hiring figures.

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