US economy added 312,000 jobs in December

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WASHINGTON, Jan 3 (Reuters) - U.S. manufacturing activity slowed sharply to a two-year low in December amid a plunge in new orders and hiring at factories, suggesting the economy was probably not immune to slowing growth in China and Europe.

The Labor Department also revised job numbers for October and November, with both month's showing more jobs created than previously thought.

"We remain constructive on the United States labor market at the start of 2019", said Sam Bullard, a senior economist at Wells Fargo Securities in Charlotte, North Carolina.

The torrid hiring in December far outstripped the 180,000 jobs investors had been anticipating and could help ease fears that the economy's expansion - now in the middle of its 10th year - may be coming to an end.

The US economy created many more jobs than expected in December, according to the latest government data.

Job gains were reported across all industries, with the exception of the information sector, which shed employment for the second straight month.

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Economists were expecting about 190,000 jobs to be added. For the year, those jobs have increased by 241,000.

The BLS said average hourly earnings increased in December by 11 cents, to $27.48 per hour - up 3.2 percent to a new nine-year high. The Dow Jones industrial average climbed roughly 450 points in morning trading, an increase of about 2 percent. The average workweek increased to 34.5 hours in December from 34.4 hours in November.

The Labor Department said Friday that the unemployment rate rose slightly to 3.9 percent, but that reflected a surge in jobseekers - a positive for growth.

The unemployment rate is seen holding steady at 3.7%, its lowest level since 1969 during the Vietnam draft. Powell is due to appear on a panel with his two predecessors about two hours after the report's release.

The U.S. central bank raised rates four times in 2018.

The report eases fears that the US job market might be headed for a slowdown. The dollar .DXY surrendered earlier gains against a basket of currencies and U.S. Treasury yields rose.

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"The claims data suggest that conditions in the labor market have softened relative to a few months ago when the claims readings were very upbeat, but the extent of any deterioration is not entirely obvious and does not look extreme at this point", said Daniel Silver, an economist at JPMorgan in NY.

Despite other data showing a slowdown in manufacturing, the nation's factories added 32,000 jobs in December.

The Labor Department has not been affected by the partial shutdown of the USA government and will continue to publish economic data complied by its statistics agency, the Bureau of Labor Statistics.

Data releases from Census Bureau and Bureau of Economic Analysis have been suspended during the shutdown, which started on December 22 amid demands by Trump for $5 billion in funding for a wall on the U.S. -Mexico border.

Even with fear of a global economic slump depressing stock markets, Friday's jobs report for December is expected to offer reassurance that the USA economy remains sturdy and on track to expand for a 10th straight year.

Growth forecasts for the fourth quarter are around a 2.6% annualized rate, with risks tilted to the downside amid fading stimulus from the Trump administration's US$1.5 trillion tax cut package, a trade war with China and policy uncertainty in Washington.

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The economy grew at a 3.4 percent pace in the third quarter.