The creation of employment in the United States was moderated in November at a rate of 155,000 new employees. The unemployment rate, however, remained at 3.7%. The indicator therefore gives arguments to the Federal Reserve to raise interest rates again this month, although at the same time it would justify that it be less aggressive in the normalization process, so as not to slow down the economy too much.
The data is below what was expected, which had the creation of 190,000 jobs in November. The hiring in the two preceding months was also lower than expected. Salaries, in the meantime, rose at an annual rate of 3.1%, as in last October, which was already considered the largest annual increase since the last recession. As for the participation rate, it is at 62.9%.
In the absence of publication of the December data, job creation in the US already exceeded the 2.18 million registered in 2017 and almost equals the 2.34 million in 2016. The unemployment rate, meanwhile , has been stable for three months at its lowest level since the Vietnam War five decades ago. The labor market, therefore, continues to advance solidly.
And that despite the fact that the Fed pointed out in its Beige Book this week that companies have difficulty finding employees they need to fill vacant positions. It is not the only factor that plays against. Confidence "shrinks" due to the impact of tariffs on costs and its negative effect extends to all sectors, from industry to commerce and catering.
The term tariff is cited on 39 occasions in the report of the US central bank. The companies say they can absorb part of the costs, to prevent consumers from falling back if they go further. But there are others that begin to raise prices in anticipation of higher tariffs. On the whole of the economy, qualifies as "modest" growth at the start of the fourth quarter
The ballast effect on the economic activity of the US-China trade conflict is a cause for concern among investors, which is creating volatility in markets around the world. Also the rise in interest rates. The Fed is expected to raise them again this month although its president, Jerome Powell, said last week that the price of money would be close to a neutral level.
Powell also reiterated that there is no pre-established plan and that his strategy will depend on the evolution of the data. The rates were raised in the US each quarter during the last two years. That rate, therefore, could change throughout 2019. The containment of inflation, as some members of the central bank point out, allows us to be more patient to analyze where the economy is going.