WASHINGTON (AP) – U.S. job growth declined modestly in November, a move that could signal a slower but still steady pace of hiring and growth next year.

The potential for a more anemic economy contributed to a sharp drop in the stock market Friday, sending the Dow Jones average down 560 points, or 2.2%, by market close.

Yet most economists said last month’s job gain of 155,000 is more sustainable than some of the larger increases posted earlier this year. And hiring at last month’s pace would make it easier for the Federal Reserve to slow its interest rate increases, which investors worry are weighing on the economy.

“This is the new Goldilocks,” said Josh Wright, chief economist at iCIMS, a recruiting software company. “Still strong-enough job growth, but a more cautious Fed.”

The unemployment rate stayed at 3.7 percent, a nearly five-decade low, for the third straight month, the Labor Department said Friday in its monthly jobs report.

Still, the panicky financial markets illustrate how the views of Wall Street and most of the rest of the U.S. can differ.

For most Americans, jobs and incomes are the most important economic measures. Average hourly earnings increased 3.1% in November from a year earlier, Friday’s report
said, only the second time they have climbed that much since the recession ended nine years ago.

That’s boosting consumer confidence to nearly 18-year highs, spurring more spending, and bolstering winter holiday shopping. Americans lifted their spending in October by the most in seven months.

“We’re still a little surprised to see such a growing panic in markets develop quite so soon given the relatively benign economic backdrop,” Paul Ashworh, an economist at Capital Economics, said in a research note.

Yet for Wall Street, higher pay can crimp corporate profit margins. Many large, publicly-traded companies are hit by slower growth in places such as Europe and Japan. They are also more directly affected by tariffs that the Trump administration has imposed on a range of imports.
“There is a disconnect between the gloom and doom environment in financial markets and real economic conditions,” said Gad Levanon, chief economist at the Conference Board, a research group.

Most analysts do expect economic growth to decelerate next year. The boost from the Trump administration’s tax cuts, implemented late last year, is expected to fade. The Fed’s rate hikes could send borrowing costs higher. And the Trump administration has imposed tariffs on almost half of all imports from China, which will remain in place during a 90-day window for negotiations announced last weekend.

Those concerns have roiled financial markets, sending major stock indexes down more than 4% this week. That’s the worst weekly decline since March.

Growth is forecast to slow to a still-solid 2% to 2.5% percent, analysts say, down from roughly 3% this year. Hiring will likely decline to about 150,000 a month from just above 200,000 this year, through November. “The economy continues to churn out new jobs and reflects the strong underlying business conditions that point to steady, albeit slower job growth and economic activity in 2019,” said Joe Brusuelas, chief economist at consulting firm RSM.

Fed policymakers are still likely to raise shortterm interest rates at its meeting later this month, Brusuelas said. But Friday’s report suggests the Fed may not hike rates next year as rapidly as many investors have feared.