U.S. nonfarm payrolls showed an impressive growth in December and payrolls for the previous two months was revised sharply higher. The U.S. stock market and the dollar climbed after good payrolls report.
Nonfarm payrolls increased a seasonally adjusted 292,000 in December, according to the report from the Labor Department on Friday. The unemployment rate remained an unchanged 5% in December. The reason why more jobs were added but unemployment didn’t go down is that more people are entering the labor force to look for jobs.
The strong payrolls data beat the estimates of the economists. Economists surveyed by The Wall Street Journal had expected a 210,000 payrolls increase, and the highest estimate in a Bloomberg survey is also below 292,000.
Payrolls for the previous two months were revised a 50,000 higher. It means that 50,000 more jobs were added in October and November. The initially reported payrolls in November were 211,000 and now are revised to 252,000. The initially reported payrolls in October were 298,000 and now are revised to 307,000.
Although the payrolls data was very strong, the wages didn’t change a lot. Average hourly earnings in December fell by 1 cent to $25.24 compared to the prior month and increased 2.5 percent compared to a year ago. This wage growth is not bad in the previous five years, but it is modest in the history.
The strong job report supports the Fed’s intent to hike rates in the future. But the modest wage growth becomes a concern for Federal Reserve. The Fed wants to increase the inflation to a target of 2%. Better wages will encourage people to spend more and help to push the inflation.