Nonfarm payrolls increased by312,000 in December, easily topping all forecasts, after anupwardly revised 176,000 gain the prior month.

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U.S. employers added the most workers in 10 months as wage gains accelerated and labor-forceparticipation jumped, reflecting a robust job market that nevertheless facesmounting risks in 2019.

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Nonfarm payrolls increased by 312,000 in December, easilytopping all forecasts, after an upwardly revised 176,000 gain theprior month, a Labor Department report showed Friday. Averagehourly earnings rose 3.2 percent from a yearearlier, more than projected and matching the fastest pace since2009. Meanwhile, the jobless rate rose from a five-decade low to3.9 percent, reflecting more people actively seeking work.

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Related: Power shifts to the job seeker in today's hiringmarket

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The dollar surged, U.S. stock futures remained higher andTreasuries tumbled following the strong report. Hiring and wageincreases will support consumer spending and offer some respiteafter a spate of weak economic data and cuts in corporate revenueforecasts fueled stock-market jitters. Still, it may be hard toreplicate such labor-market gains in 2019 amid the U.S.-Chinatariff war, softening manufacturing, a housing slowdown and aprojected cooling in global growth.

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Federal Reserve Chairman Jerome Powell is scheduled to speaklater Friday morning in Atlanta. While the report is in line withthe Fed's view of a healthy job market and officials last monthpenciled in two interest-rate hikes for 2019, the central bank mayneed more evidence of strength before moving forward with the nextincrease following four in 2018.

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The data probably brought a “huge sigh of relief on ConstitutionAvenue,” the site of the Fed's headquarters in Washington, saidTorsten Slok, chief international economist at Deutsche Bank AG.The figures take pressure off Powell to downplay the dot-plot rateforecasts of policy makers, and the chairman can “easily justify”additional hikes, Slok said on Bloomberg Television.

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Before Friday's report, investors had begun betting that policymakers will instead end up cutting borrowing costs.

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Now, “this should give the Fed some comfort that theirassessment of the economy is correct and that they're on track forfurther rate increases this year,” said Michael Gapen, chief U.S.economist at Barclays Plc.

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The figures brought the 2018 payrolls gain to 2.64 million, upfrom 2.19 million in 2017. Economists have expected the pace ofgains to ease this year, consistent with their forecasts that grossdomestic product growth will moderate amid the trade war and afading boost from the Trump administration's tax cuts. Even so,President Donald Trump is likely to cheer the results as evidencethat his policies are still boosting the economy, rather thandragging it down.

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What Bloomberg economistssay This is the strongest employment report of thiseconomic cycle — hands down. While we've seen greater job gains insome months, the plus-300,000 number along with another increase inaverage hourly earnings clearly signals that the economic expansionended 2018 on strong footing. Perhaps most surprising was thetwo-tenths rise in the unemployment rate due to an increase inparticipation. It's one month of data, but talk of the Fed cuttingrates in the near future should be off the table for now.

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– Tim Mahedy, BloombergEconomics

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The labor strength spanned most industries, including thebiggest gain in construction since February, and the mostmanufacturing jobs added in a year. Private service providersboosted payrolls by 227,000, the most in more than a year, amidgains in education and health services, leisure and hospitality,and retail.

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While the unemployment rate increased to a five-month high, itmay not be much of a concern because the participation rate rose to63.1 percent — the highest since September 2017 — from 62.9percent. The jobless rate remains well below the level that centralbankers consider sustainable in the long run.

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Average hourly earnings for all private workers rose 0.4 percentfrom the prior month following a 0.2 percent gain, the reportshowed. The annual increase followed a 3.1 percent advance.

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Another measure, average hourly earnings for production and non-supervisory workers, increased 3.3 percent from a yearearlier. While worker pay has risen very gradually duringmost of the economic expansion, companies have been competing morevigorously in recent months to attract and retain workers.

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More details: 

  • Private payrolls rose by 301,000, well above the medianestimate of 185,000. Government payrolls increased by 11,000.
  • The employment-population ratio, another broad gauge oflabor-market health, was unchanged at 60.6 percent.
  • The average workweek increased to 34.5 hours from 34.4 hours inthe prior month; a shorter workweek has the effect of boostingaverage hourly pay.
  • The U-6, or underemployment rate, was unchanged at 7.6 percent.This measure includes part-time workers who want a full-time joband people who are less active in seeking work.
  • In annual revisions to data based on the household survey, theunemployment rate for October was increased to 3.8 percent from 3.7percent.
  • Labor Department economic releases are proceeding as scheduled,as the agency isn't part of the partial federal- governmentshutdown.

— With assistance by Chris Middleton, Sophie Caronello, andChristopher Condon

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