MARY RECHARD, HOST: Coming next on The World and Everything in It, the Monday Moneybeat.
NICK EICHER, HOST: A surprise report on jobs rallied the financial markets on Friday and turned a down week positive on Wall Street.
American employers added 312,000 jobs in the month of December. To give you a sense of how big a deal that is, job growth had been averaging a little over 200,000 jobs a month to that point, and economists had been expecting something in the range of 180,000.
So 300,000-plus was an attention-getting number, and it gave the stock market cause for optimism. Gus Faucher is chief economist at PNC Financial Services Group.
FAUCHER: I think that we will continue to see near-term volatility in stock prices, but I don’t think that’s indicative of problems in the broader U.S. economy. So given the fact that consumers are in good shape, that businesses are in good shape, I think the U.S. economy will continue to expand and then I think by the middle of this year, this will become the longest expansion in U.S. economic history.
EICHER: Average hourly earnings rose 3.2 percent in 2018. That’s the biggest full-year gain of the expansion.
And the December Labor Department report marked the 99th straight month of growth in jobs.
Meantime, the unemployment rate ticked up to 3.9 percent. But that, too, is a sign of strength, because it means more people are coming off the sidelines and looking for work.
One more surprise: The jobs report showed manufacturers added 284,000 jobs to their payrolls in 2018. The annual gain was the biggest increase in more than two decades. And it came despite a dollar relatively stronger than foreign currencies. That tends to make U.S. manufactured goods less competitive on the world market.
REICHARD: Wall Street had been headed for another losing week when the jobs report came out.
Markets roared back and erased earlier losses. So all the major indexes started 2019 on a positive note.
The Dow Jones Industrials added 1.6 percent on the week. The Standard and Poor’s 500 picked up almost 2 percent.
The Nasdaq had taken a big hit on Apple’s losses the day before, yet recovered to gain 2.3 percent overall.
Even the Russell 2000 index of smaller-company stocks picked up 3.2 percent.
EICHER: Markets are still jittery about global growth, and in particular about China’s economic troubles and concern about continued rising interest rates in the United States.
But Federal Reserve chair Jay Powell offered the prospect of an interest-rate respite. Speaking in a public forum in Atlanta on Friday, Powell said there’s “no set path” on rate hikes by the Fed, and that the central bank is willing to be patient.
That news spiked stocks even further on Friday.
Powell added that even though raw economic data on the U.S. economy is almost uniformly strong, the Fed is scrutinizing contrary signals that Wall Street is sending.
POWELL: Financial markets have been sending different signals—signals of concern about downside risks, about slowing global growth, particularly related to China, about ongoing trade negotiations, about what maybe let’s call policy uncertainty coming out of Washington.
EICHER: And that’s today’s Monday Moneybeat.