Announced this morning, the economy added 216,000 jobs in December, higher than expected but last month’s figure was revised lower by 26,000. The Health Care and Social Assistance industry, Leisure and Hospitality industry, and Government jobs were all relatively strong while the Transportation and Warehousing was relatively weak. The Unemployment Rate held-steady at 3.7% and the Labor Force Participation Rate fell to 62.5%, three tenths lower than the previous month. Average Hourly Earnings increased 0.4% in December, more than expected, and grew 4.1% on an annual basis. In addition, Average Weekly Hours were 34.3, which is one-tenth lower than the previous month.
Overall, another increase in the headline jobs number in December with the unemployment rate holding steady, still below 4% and within reach of the lows going back to 1970. Wages increased more than expected in December and came in at an annual rate of 4.1%, slightly above the long-term average. At their most recent meeting, the Federal Reserve acknowledged that for now their policy rate is likely at its peak for this cycle and upside risks to inflation have diminished from earlier in 2023. However, with a continued resilience in the labor market and wage increases slightly above average, the Federal Reserve may be inclined to wait further to reduce rates in upcoming meetings. In addition, they will need to become more predictive, rather than reactionary to data, to be true to a balanced view between the risks of inflation and the risks of a slowing economy at some point in the future.
Following the release of the jobs report, the yield on the U.S. 10-year treasury moves higher and equity futures are lower as we head into the market open.
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