Labor market activity is a coincident indicator with GDP growth. Historical evidence shows that declining employment growth and a stable or rising unemployment rate has pre-dated every US recession since 1960.
For now, a solid US labor markets data signals that recession risk in US remains low. However, slowdown in consumer spending is a potentially worrying trend. Much of the weakness in growth can be traced to trade and manufacturing, two sectors that have underperformed and will likely continue to do so for some time.
Payroll and household employment rose by 851,000 and 987,000 respectively, in Q4. Data suggests that private consumption is being held back by other factors. Reduced spending on utilities was largely due to unseasonably warm weather, and hence will likely prove transitory.
