Implications: The US labor market has rarely been stronger. Payrolls increased 266,000 in November, easily beating the consensus expected 180,000 and coming in higher than the forecast from any economics group. In addition, payroll growth was revised up 41,000 for the prior two months. Remember how October was supposed to be a soft month for job growth because of the UAW strike? Today's report shows payroll growth of 156,000 in October, a very respectable month. Civilian employment, an alternative measure of jobs that includes small-business start-ups, grew a tepid 83,000 in November, but that follows average gains of 350,000 per month in the prior five months in this volatile series. In the past year, nonfarm payrolls are up 184,000 per month while civilian employment is up 149,000. The trend in job growth is likely somewhere in the middle, around 165,000 jobs per month. The unemployment rate ticked down to 3.5% in November but has essentially been range-bound at very low levels in the past three months, hovering between 3.52% and 3.56%. Perhaps the weakest part of today's report was the tepid 40,000 increase in the labor force, which caused the downward tick in the participation rate to 63.2%. But labor force data are volatile from month to month and are still up 1.6 million from a year ago. Even so, participation among "prime-age" workers (25-54) remained at the highest level in more than a decade. We like to use the employment report to measure workers' purchasing power and that looks healthy, too. Average hourly earnings rose 0.2% in October and are up 3.1% from a year ago. Meanwhile, the number of hours worked rose 0.2% and are up 1.6% from a year ago. Combined, total earnings are 4.8% ahead of a year ago, which is more than enough to keep powering consumer spending higher. The Federal Reserve is clearly done cutting rates and the economy is in good shape. Look for continued solid job creation in 2020. There's no recession in sight.
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