Jobs - Like me continuously attempting to manage my portfolio, economists must love to make themselves suffer. Friday's jobs report (and my 2021 returns) confirm these facts.
After predicting 422,000 job additions for the month of December, Friday's report showed that these estimates missed the mark by about 76%, clocking in only 199,000 hires across the country. Nice try guys, but once again, way off.
Meanwhile, the unemployment rate dropped to 3.9%, getting closer and closer to the pre-pandemic level of 3.5%, which, if you recall, was a 50 year record low. Putting last month in perspective, things are looking not-too-bad for the U.S. labor market. Considering we had record setting COVID cases all throughout the month courtesy of our new friend Omicron, companies adding 199,000 non-farm payrolls is pretty decent. Once again, leisure and hospitality led for growth within sectors, adding 53,000 employees.
A highlight of the report showed that wage growth increased above expectations, rising 4.7% YoY and giving most of those gains to lower-income earners. Still, when we recall November's CPI print of 6.8%, that rise, to put it frankly, ain't sh*t. We'll get December's CPI reading on Wednesday, from which we can really put wage growth into perspective.
As always when the Employment Situation Summary is released, everyone wants to know what this means for interest rates. The truth is that it's unclear, but we can still do what we traders love to do and speculate wildly. Realistically, this report likely won't influence JPow or the FOMC's opinions too much as the growth we saw proved adequate all things considered. If we saw truly abysmal or even negative growth, this would be a different story.
Now, all eyes turn to Wednesday for the aforementioned CPI report. Hold on to your bananas, apes, it's gonna be a fun month.