In this morning’s data, the economy added 256,000 jobs in December, much higher than expected driven by an increase in private payrolls. The Retail Trade industry and Health Care and Social Assistance industry were both relatively strong, while the Manufacturing industry was relatively weak. The Unemployment Rate fell one tenth to 4.1% and the Labor Force Participation Rate at 62.5% is the same as the previous month. Average Hourly Earnings increased 0.3% in December, as expected, and grew 3.9% on an annual basis. In addition, Average Weekly Hours were 34.3, which is the same as the previous month.
Overall, another strong month with more jobs added to the economy than expected, coupled with a slight drop in the unemployment rate. Average Hourly Earnings on a monthly basis grew a bit less in December when compared to the previous period, but annual rates remain near the historical average. Job increases in retail trade and social assistance industries also suggest relative strength in the services side of the economy.
The labor market appears intact as we start the new year. As a decent gauge of economic activity, employment data trends can provide focus on the direction of inflation. Given recent inflation measures are sticking above desired targets, the Federal Reserve will continue to closely monitor the direction of the unemployment rate and inflation for future policy.
Following the release of the jobs report, the yield on the U.S. 10-year treasury ticks higher and equity futures are lower as we head into the market open.
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