US economy added 312,000 jobs in December

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

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

More broadly, the USA labor market is extraordinarily tight, leaving businesses reluctant to let workers go.

A third report from the Labor Department showed initial claims for state unemployment benefits rose 10,000 to a seasonally adjusted 231,000 for the week ended december 29. In 2018, employers added 2.6 million jobs, or an average of almost 217,000 a month, according to the Labor Department.

Jobs in construction rose by 38,000 with job gains in heavy and civil engineering construction and nonresidential specialty trade construction.

"It appears that higher wages are the reason why people are returning to the active labor force in large numbers", said Paul Ashworth, chief US Economist with Capital Economics.

The economy grew at a 3.4 percent pace in the third quarter.

A strong employment report could offer some relief to global markets, which have reeled in recent months from a flood of concerns including slowing economic growth. The average number of hours people worked also edged up.

US stocks extended losses on the weak ISM survey, with the Dow Jones Industrial Average falling more than 600 points at one point.

The report flies in the face of the growing pessimism recently plaguing financial markets that the US economy is slowing and may even be slipping toward recession.

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.

United States financial markets are projecting no rate hikes in 2019. In the latest signal that investors see little room for the Fed to lift rates any further, yields on 2-year U.S. Treasury notes on Thursday dropped below the Fed's policy rate for the first time in more than a decade.

The expected continuation of steady job growth suggests that such risks might be - for the moment, anyway - overblown.

Citigroup's measure of how key economic indicators are faring versus economists' forecasts is at its most negative in 16 months.

It is expected to slow to around 150,000 per month this year as workers become more scarce.

Speaking at an American Economic Association event with former Fed chiefs Janet Yellen and Ben Bernanke on Friday, Powell sought to placate jittery financial markets. "Too hot means fears of Fed tightening, too cool means fears of recession". It needs to create roughly 100,000 jobs per month to keep up with growth in the working-age population.

USA employers dramatically stepped up their hiring in December, adding 312,000 jobs in an encouraging display of strength for an economy in the midst of a trade war, slowing global growth and a partial shutdown of the federal government.

The sharp stock market sell-off has raised concerns about the economy's health.

The ADP report has a spotty record predicting the private-payrolls component of the government's employment report and last month's surge probably exaggerates the strength of the labor market because of a seasonal quirk.

"We expect the December employment report to remind markets that the USA growth outlook remains stable despite financial market volatility", he said.

While the broader labor market remains strong, 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.

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