The U.S. jobs market ended 2019 on a sour note, with December's payroll and wage growth missing expectations, according to Labor Department figures released Friday.
Nonfarm payrolls increased by just 145,000 while the unemployment rate held steady at 3.5%. Economists surveyed by Dow Jones had been looking for job growth of 160,000. The jobless rate met expectations for staying at a 50-year low.
In addition to the slow payroll growth, average hourly earnings rose by just 2.9%, below the 3.1% projection. December marked the first time that wage gains were below 3% on a year-over-year basis since July 2018.
Revisions to the October and November counts brought those two months down by 14,000 as well. The glittering 266,000 initial estimate for November came down 10,000 while October's fell from 156,000 to 152,000.
Dow futures turned negative following the disappointing report.
Lowest since 1994
On the upside, a separate, more encompassing measure that includes discouraged and underemployed workers fell to 6.7%, the lowest it's ever been in records going back to 1994. The decline came amid a drop of 140,000 in people working part-time for economic reasons.
The labor force participation rate held steady at 63.2% as the workforce rose by 209,000 to 164.6 million and those considered no longer in the job pool fell by 48,000 to 95.6 million.
The total employment level rose to 158.8 million, also a fresh high. However, the unemployment rate for African Americans rose 0.3 percentage points to 5.9%.
For the year, payrolls increased by 2.1 million, an average of 176,000 a month, the slowest year for job creation since 2011 — three years after the start of the financial crisis — and down considerably from the 2.7 million positions added in 2018.
The numbers follow a year of anxiety about a potential recession on the horizon. While fears of an outright downturn have largely been eradicated, recent surveys among corporate executives show a high level of unease about slowing growth.
Manufacturing job declines
Job gains in December came primarily from retail (41,000), leisure and hospitality (40,000) and health care (28,000).
Construction rose by 20,000 and professional and business services saw an increase of 10,000, while manufacturing declined by 12,000, transportation and warehousing lost 10,000 and mining fell by 8,000.
It was a difficult year for manufacturing jobs: The sector saw a net gain of just 46,000 compared with a 264,000 gain the year before. The U.S. and China spent the year locked in a trade battle that saw billions of dollars in tariffs exchanged between the two sides.
The average work week, considered a good indicator for employers' future intentions, held steady at 34.3 hours.
The Labor Department also released its annual revisions to its household survey data, but there were no changes to monthly unemployment rates throughout the year.
Correction: This report was corrected to show that the October job gains fell to 152,000, making the total revisions for October and November down by 14,000.
1. Dow set to trade above 29,000 for first time at open
Traders and financial professionals work on the floor of the New York Stock Exchange at the closing bell on October 30, 2019 in New York City.
Drew Angerer | Getty Images
U.S. stock futures, ahead of the release of the government's monthly employment report, were higher on Friday after record closes for the Dow Jones Industrial Average, S&P 500 and Nasdaq. The Dow is being indicated to trade above 29,000 for the first time ever at Wall Street's open. That could, of course, change after the December jobs report comes out at 8:30 a.m. ET. But as of Thursday's close, the Dow and S&P 500 were tracking for over 1% gains for the week, and the Nasdaq was riding a weekly increase of 2%.
2. December's jobs report could have some surprises in it
Flextronics International Apple factory employees work on Apple Mac Pro computer assembly in Austin, TX, November 20, 2019.
Tom Brenner | Reuters
Economists expect December's employment report to show a solid pace of job growth and steady wage gains. Nonfarm payrolls are expected to have increased by 160,000 last month, with steady 3.1% year-over-year wage growth. The unemployment rate is expected to remain unchanged at 3.5%, matching half-century lows. However, economists say both the headline payroll number and wage growth could be above forecasts because the economy has been a bit stronger than expected recently.
3. 'Designed by clowns who in turn are supervised by monkeys'
Boeing 737 MAX airplanes are parked at Grant County International Airport October 23, 2019 in Moses Lake, Washington. Boeing reported that its profits were down by more than half in the latest quarter.
David Ryder | Getty Images
Shares of Dow stock Boeing were under some pressure in Friday's premarket trading after the embattled aircraft giant released a trove of internal communications that showed employees boasting about bullying regulators to approve the now-grounded 737 Max without requiring pilots to undergo simulator training. In messages from April 2017, one Boeing employee told another: "This airplane is designed by clowns who in turn are supervised by monkeys."
4. House passes resolution to limit Trump's war powers
President Donald Trump announces proposed rollbacks to the National Environmental Policy Act regulations during an event in Roosevelt Room of the White House in Washington, January 9, 2020.
Kevin Lamarque | Reuters
The House passed a resolution to curb President Donald Trump's war powers against Iran, which retaliated this week for the U.S. killing last week of a top Iranian general. The Democratic-held House approved the nonbinding measure by a 224-194 vote, mostly along party lines. However, three Republicans and an independent did vote for it, while eight Democrats did vote against it. While nearly all Republicans have expressed support for taking out Iranian Gen. Qasem Soleimani, a few GOP lawmakers criticized the Trump administration after being briefed on the operation.
5. Pelosi: I won't rush to send impeachment articles
Speaker of the House Nancy Pelosi, D-Calif., meets with reporters following escalation of tensions this week between the U.S. and Iran, Thursday, Jan. 9, 2020, on Capitol Hill in Washington.
J. Scott Applewhite | AP
House Speaker Nancy Pelosi is saying she will not rush to deliver two articles of impeachment against the president to the Senate. The decision to delay sending the articles is part of a strategy aimed at forcing concessions out of Senate Majority Leader Mitch McConnell on rules for the trial. Trump said he would support witnesses testifying in his upcoming Senate impeachment trial, as long as it meant his legal team could summon House Intelligence Committee Chairman Adam Schiff, former Vice President Joe Biden and his son Hunter Biden, and the anonymous whistleblower whose 2019 complaint sparked the impeachment probe in the first place.
Friday’s trading is likely to be driven by the release of the Labor Department’s jobs report, so more on that in a second.
A bit longer term is this call of the day from Shep Perkins, chief investment officer for equities at Putnam Investments. He argues the S&P 500
SPX, +0.67%
could reach 5,000 quicker than you might imagine, given that it only reached 3,000 in July (and closed Thursday at a record 3,274.70).
In the Boston fund manager’s first-quarter outlook, Perkins says price-to-earnings multiples are in line with their average in recent decades, and there is a reasonable case that multiples will expand, fueled by historically low long-term bond yields.
For much of the second half of 2019, the dividend yield on the S&P 500 was higher than the 10-year U.S. Treasury yield
TMUBMUSD10Y, -0.38%
—compared with bonds, stocks have almost never been cheaper.
Technology giants including Facebook
FB, +1.43%,
Google owner Alphabet
GOOG, +1.10%,
Cisco Systems
CSCO, -0.42%,
Intel
INTC, +0.56%
and Apple
AAPL, +2.12%
have “undemanding valuations,” says Perkins, while sectors including financials, energy and basic materials, which account for a fifth of the S&P 500, are priced well below historical average.
And what if earnings accelerate, say driven by a pickup of global growth and a weakening dollar? “With earnings growth of 8.5% per year and a 26x P/E multiple, the market would surpass that mark inside of three years. This is hardly the base case, but it’s also not an extreme scenario in the event bond yields remain depressed,” Perkins says.
Even if a recession hits, the S&P 500 could reach 5,000 in five years, particularly if that downturn came this year or next, he adds.
The buzz
The number of new jobs created in December may have tapered off to about 160,000 from a surprisingly large 266,000 gain in the prior month, according to economists polled by MarketWatch. The unemployment rate is seen as staying at 3.5%, a 50-year low. The data report is due at 8:30 a.m. Eastern.
Tom Porcelli of RBC Capital Markets, who is forecasting 150,000 jobs created, says the labor market is heading toward a lower break-even point, that is, the level at which jobs are created to absorb the growth in the labor force. The number of prime-working-age people not in the labor force is now down to prerecession levels, suggesting that future employment growth may become more closely aligned with population growth, which would take the break-even level down to around 100,000 a month.
As wages are rising, “we need to get used to lower rates of job growth, but that’s not necessarily a bad thing,” Porcelli says.
On the corporate front, new internal emails paint a disturbing picture of the deadly Boeing
BA, +1.50%
737 Max aircraft, with one insider saying the plane was “designed by clowns who in turn are supervised by monkeys,” the latter referring to the Federal Aviation Administration. Boeing shares advanced on Thursday on indications the 737 that crashed in Tehran may have been accidentally shot down.
A spokesperson for delivery service Grubhub
GRUB, +1.79%
told the New York Post there are no plans to sell the company, following a report it was reviewing its strategic options.
Eli Lilly
LLY, +1.65%
announced it was buying skin-focused biopharma Dermira
DERM, +4.47%
in a $1.1 billion deal.
The markets
After the 211-point surge in the Dow industrials
DJIA, +0.74%
on Thursday, U.S. stock futures
ES00, +0.24%
leaned higher. European stocks
SXXP, +0.09%
were on track to reach a record.
Need to Know starts early and is updated until the opening bell, but sign up here to get it delivered once to your email box. Be sure to check the Need to Know item. The emailed version will be sent out at about 7:30 a.m. Eastern.
CES 2020 is a wonderful yet bewildering place, jam-packed with available-right-now tech and never-will-be moonshots in equal measure. It's hard to find -- let alone make sense of -- the automobiles, pieces of technology and services that will impact you, the car-buying consumer.
We're here to help. Going beyond Roadshow's favorite bits of mobility tech and the best cars and concepts, here are some of the key themes and breakthroughs at CES 2020 that our editors believe will reshape the future of mobility -- both in the near term and the distant future.
Biometrics
No, nothing like the Mercedes-Benz Vision AVTR is going to be parked in your driveway during this new decade. But some of the key tech inside this striking, Avatar-inspired showcar is likely to figure into your automotive future sooner than you think: biometrics. This new concept car not only detects your pulse (confirming it with nudge on your seatback) while also detecting your breathing, it does away with a steering wheel and instead recognizes the driver with a multifunctional control element activated with one's palm.
Long before full autonomy becomes a reality, cars are going to be ever-closer monitoring drivers and occupants for many reasons, including making sure they're paying attention to the act of driving, optimizing safety systems in the event of a crash and to tailor infotainment experiences to individual passengers. Biometrics will be an important new way to help accomplish these goals.
Sony getting into cars in a big way
Sony is certainly no stranger to the automobile -- it's been working on in-car audio and various other nooks and crannies in the motoring world for many years. But it's never signaled quite a splash as it did at CES, with the jaw-slackening debut of what looks to be a fully baked electric car.
At the moment, Sony says it has no plans to actually offer this car -- a sleek-looking four-door designed with supplier powerhouse Magna -- for sale to consumers. Instead, consider this unnamed vehicle to be a rolling showcase for its Vision-S connected car platform. The package includes no fewer than 33 sensors arrayed inside and outside the vehicle, plus the mother of all infotainment systems. The dashboard is dominated by no fewer than six screens, and there's Sony's 360 Reality Audio system for the sound from the streaming movie and game feeds to wash over passengers.
When a company with the size, history and expertise of Sony decides it wants to worm its way into the cars of tomorrow, you can bet it's going to impact the automotive landscape.
Smart helmets
Even if you're not a motorcyclist, you stand to benefit from the advent of smart helmets. Why? They will make the roadways safer for all motorists, and even pedestrians. In the case of Tali Connected's new helmet, that includes high-visibility features like built-in turn signals and taillights.
In addition to trick lighting, Tali's helmet will sync with a smartphone app via Bluetooth to enable not only expected features like telephony and music, but also navigation directions and even accident/fall detection and automatic emergency service notification.
Velodyne's Velabit lidar sensor is tiny and shatters the $100 price barrier.
Velodyne
Cheap lidar
Never mind what Tesla'sElon Musk says, nearly all automakers and industry experts agree that lidar is the cornerstone of our self-driving future. Laser radar will work in concert with other sensors, including cameras, ultrasonic and long-range radar to help the cars and trucks of tomorrow 'see' their way around. The key will be getting the cost of these sensors down to a point where all cars -- not just high-end models -- can have them onboard.
Velodyne has just introduced its Velabit lidar at CES, and not only is it tiny -- smaller than a deck of playing cards -- it shatters the price barrier, costing $100 per sensor. Just last year, rival Luminar made waves by promising to offer lidar sensors for under $1,000. The Velodyne and Luminar sensors may not share exactly the same specs, but the rapid price drop year over year is a ready illustration of how much progress is being made in this area.
While we still wouldn't bet on your next car offering hands-off Level 4 autonomy, major strides like this in cost and miniaturization should help pull that horizon in closer.
Lightyear
Solar-powered cars
Now, the idea of integrating solar panels into a vehicle's roof has been around for quite a long time, and thus far, the impact of the technology has been pretty minimal. These days, you can soak in the sunshine juice in a Toyota Prius or a Karma Revero, but their returns on investment are pretty minimal. But thanks to improvements in both efficiency and cost reductions, you can expect a lot more of this sunlight-capturing tech in the coming years, especially as cars load up on more and more power-sapping sensors for increasing levels of automation and even more creature comforts.
We're not honestly suggesting that your next car is going to rely solely on sun power. Not even close. But solar is finally starting to make meaningful inroads as a supplementary power source for new vehicles. And that trend isn't just accelerating on expensive cars, either -- Hyundai will shortly offer the technology on its brand-new Sonata. The Korean automaker claims its new roof array will generate enough juice to provide around 800 miles of additional range per year in its forthcoming Sonata Hybrid model. That's significant.
Some companies are even more ambitious than that. The slipstream Lightyear One presented at CES 2020 promises to deliver some 7.5 miles of range per hour of charge time. That means that if you left your car outside during a sunny eight-hour workday, you could theoretically recover some 60 miles of charging, likely more than your commute home.
Even if the $170,000 Lightyear One never truly gets off the ground, we're betting you're going to see a lot more cars augmented by solar power in the coming years.
Cars as mobile payment systems
All of the technologies and products above are promising, but maybe you need some life-changing automotive tech right now. Visa and SiriusXM may just have the cure for what ails you: in-dash ordering and automated payment for things you use every day. Food. Gas. Tolls. Parking. All from your driver's seat using either your car's infotainment display or voice commands.
We've seen systems from General Motors and others where you can order your morning coffee, but some functions require also interacting with your phone directly, making them less convenient. In the case of GM's Marketplace, they also require that you own one of the company's vehicles.
With the SiriusXM/Visa tech, your car just has to have a 4G-LTE data connection and SiriusXM's connected services, both of which you may already have. Now, in order to make the most of this, the two companies are working feverishly to sign up participating vendors and services en masse to ensure that your corner gas station and most-frequently used toll road are ready to accept your mobile payment. That's likely to take some time, especially if you live outside of major metropolitan areas, but given the ubiquity of Visa and SiriusXM, this convenient service may become part of your daily routine quicker than you think.
Smart visors
With a lot of the offerings at CES, it sometimes feels like you need a PhD to understand these new pieces of technology. Not just how they work, but how they might benefit you and your motoring life. Bosch's Virtual Visor is refreshingly easy to understand: It improves on the nearly century-old sun visor by offering up to 90% more visibility. How? By employing a transparent LCD visor that can be intelligently blacked-out section by section to only block those areas where the sun is impeding the driver's visibility. It does so with powerful software and a simple driver-facing camera.
While this tech is likely at least a few years from finding its way into passenger cars and commercial trucks, because it's being developed by one of the auto industry's largest suppliers, it's likely to show up quickly on a wide variety of makes and models. And hey, even if your next car, truck or SUV doesn't come with it, if the vehicles you're sharing the road with have the technology, you're less likely to get in an accident because they've been blinded by glare.
Now playing:Watch this:
This futuristic AI-powered LCD sun visor could put an...
Now, the bitcoin and cryptocurrency community have been left scratching their heads after Musk tweeted "bitcoin is not my safe word," early on Friday morning.
Elon Musk made his fortune from payments company PayPal before setting up Tesla and SpaceX. Musk has ... [+] previously used micro-blogging platform Twitter to praise bitcoin and other major cryptocurrencies.
The bitcoin price has struggled since hitting highs of around $14,000 in early July last year.
Coinbase
Meanwhile, shares in Tesla have soared this week, with its market value now topping the combined value of U.S. rivals Ford and General Motors and landing it the title of the highest-valued automaker of all time.
The sharp rise in Tesla valuation, which has doubled since October, comes after it revealed a surprise third-quarter profit and delivered a record 367,500 cars in 2019.
Lebanese prosecutor Ghassan Oueidat confirmed Thursday that a travel ban had been issued that will prevent the ex-Nissan boss from leaving the country.
Lebanon said on January 2 that it had received a "red notice" from international police organization Interpol confirming that Ghosn was wanted by police in Japan.
A red notice does not compel law enforcement authorities to arrest fugitives. Lebanon and Japan do not have an extradition treaty, and Lebanese officials have said Ghosn entered the country legally.
The former auto industry titan was awaiting trial in Tokyo for alleged financial wrongdoing before he pulled off a stunning breakout from the country late last year.
Ghosn, who is a citizen of Lebanon, Brazil and France, held a press conference Wednesday in Beirut where he proclaimed his innocence and pledged to fight back against what he described as "political persecution."
"Obviously I don't consider myself a prisoner in Lebanon," he told reporters. "I'm happy to be here. I'm with my friends, my family. I don't feel at all unhappy. I'm ready to stay a long time in Lebanon."
On Tuesday, Japanese prosecutors issued an arrest warrant for his wife, Carole Ghosn, accusing her of giving false testimony during a court hearing last April. She is also in Lebanon.
Representatives for Ghosn did not immediately respond to a request for comment on Thursday.
Japan's justice system
Ghosn was first arrested in Tokyo more than a year ago. Among other charges, prosecutors alleged that he understated his income for years and funneled $5 million of Nissan's money to a car dealership he controlled.
On Wednesday, he slammed Japan's criminal justice system, which he said "violates the most basic principles of humanity."
He pointed to his time in solitary confinement, extended questioning without lawyers present, and the lack of a speedy trial. Japanese prosecutors were intent on extracting incriminating information, not on determining the truth, he claimed, adding that he was allowed to shower only twice a week.
Ghosn said his arrest was part of a plot to oust him from the automotive empire he built between Nissan(NSANF), Renault(RNLSY) and Mitsubishi Motors. He did not provide evidence of this.
Prosecutors blame Ghosn
Tokyo prosecutors said in a statement following the press conference that Ghosn "has only himself to blame for being arrested and detained," and for the conditions of his bail.
There was sufficient evidence, they said, to "determine that there was a high probability of obtaining conviction."
Japanese Justice Minister Masako Mori said in a statement that Ghosn "has been propagating both within Japan and internationally false information on Japan's legal system and its practice."
"That is absolutely intolerable," she said.
— Sherisse Pham, Julia Horowitz and Charles Riley contributed to this report.
Pedestrians walk past a Victoria's Secret store, a subsidiary of L Brands, in New York.
Craig Warga | Bloomberg | Getty Images
Victoria's Secret parent company L Brands said its holiday sales shrunk, leading the retailer to cut its earnings outlook for the fourth quarter.
The news comes on the heels of L Brands promising investors in September that an "evolution" was ahead for the embattled lingerie brand. But there weren't many bright spots in its reports on Thursday.
To stem sales declines, L Brands has promised to use a more diverse group of models in its Victoria's Secret marketing and advertising — that will reflect women of all shapes and sizes. It has vowed to make more trend-right and comfortable products, to try to win back the customers who have fled its stores for the likes of ThirdLove and Adore Me. But that didn't come in time for the holidays.
Shares of the company fell more than 4% in premarket trading.
L Brands now expects to report fourth-quarter earnings of $1.85 per share, down from its previous forecast of $2.00 per share.
During the nine weeks that ended Jan. 4, L Brands saw net sales of $3.9 billion, down from $4.1 billion a year ago. Same-store sales declined by 3%.
Victoria's Secret's same-store sales across its stores and direct channels shrank by 12% during the holiday season, a much steeper drop than the previous year's decline of 4%.
Its Bath & Body Works division reported same-store sales growth of 9%. Sales of scented candles and lotions have been propping up L Brands' otherwise increasingly outdated bra and underwear business. But some analysts have said even Bath & Body Works' best days are over.
"Bath & Body Works' top line has been great but margins are beginning to erode and compares are daunting," Jefferies analyst Randy Konik said in a note to clients earlier this month.
"Candle penetration is maxing out," he added. "Over time, BBW.com likely will have to offer more 'free shipping' offers and its products are heavy, which adds to shipping expense. ... These factors will cause margins to erode further in the segment."
L Brands shares, as of Wednesday's market close, are down about 35% over the past 12 months. The retailer has a market cap of $5 billion.
