The US non-farm payrolls report for December looked mixed, but it contained multiple surprises. The US added 199,000 non-farm payrolls in December, not only a drop from the 210,000 jobs added in November but also far below the 807,000 jobs recorded in the ADP private markets in December. The non-farm payrolls also missed analysts consensus estimates of 450,000 jobs. This figure may reflect the most prosperous December in the US consumer market. The manufacturing, non-manufacturing and government jobs did not increase, which was driven mainly by the spread of the Omicron variant in the US, suffocating the country’s economic growth pace or even shrinking. However, other crucial parts of the report revealed that the unemployment rate and average wages recorded satisfactory improvements in December. The unemployment rate fell for the tenth consecutive month, from 4.1% in November to 3.9%. The unemployment rate has now fallen close to the pre-pandemic levels. Furthermore, another positive highlight was the average monthly growth in wages related to income and consumer spending, which increased from 0.3% in November to 0.6% in December. The annual rate was slightly lower than the previous value but still better than expected. The data from these two sections show that the U.S. job market and wage growth are still doing great. The two metrics have now met the threshold for interest rate hikes set by the Fed chairman and other Fed officials. Many believe that investors are waiting for Wednesday and Friday to confirm the latest inflation and consumption data in the United States. The two economic data sets will provide more guidance for the US dollar. Most importantly, whether the Fed should accelerate its balance sheet reduction and the pace of interest rate hikes heading into next month.
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- Last Updated: January 10, 2022
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