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The stock market struggled most of the week but staged a comeback rally on Friday on the better than expected employment report for November. The Labor Department reported nonfarm payrolls increased by 266,000 in November, well above expectations of 180,000. The unemployment rate also declined from 3.6% to 3.5%. This marks the 21st consecutive month of unemployment below 4%. The trade dispute between the U.S. and China has caused some headwinds in employment growth in some manufacturing industries, but otherwise many industries are competing to find qualified workers.

With just a few weeks left in 2019, two key events to keep watch on are the Federal Reserve meeting on December 10th and 11th and the next U.S.—China tariff deadline on December 15th. We anticipate the Fed will hold short term interest rates steady after the December 11th meeting. The trade talks between the U.S. and China continue with some hope of a Phase One agreement soon. There may be some push this week ahead of the tariffs scheduled to go in place on December 15th on $156 billion of Chinese goods not already under tariff.

Job growth in the monthly employment report is quoted as “nonfarm payrolls”. In our Dissecting Headlines section, we explain what nonfarm payrolls are.

Financial Market Update

Dissecting Headlines: Nonfarm Payrolls

The change in the number of jobs in the U.S. economy each month are phrased as an increase or decrease in “nonfarm payrolls”. From the title, we would assume that we are counting all U.S. workers except those working on farms. This isn’t entirely accurate. In addition to excluding farm workers, some government employees such as military and some of the intelligence services are excluded, as well as domestic household employees, sole proprietors, unincorporated self-employed workers, and nonprofit employees.

It takes a little more than 100,000 new jobs to be created each month to keep up with the growth of the working age population. The U.S. has averaged just over 160,000 new job created per month in 2019.

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Want a printable version of this report? Click here: NovaPoint December 9, 2019

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