Strong US Job Growth Defies Expectations

The U.S. labor market ended 2023 on a positive note, with the Labor Department's report indicating an unexpected increase in payrolls by 216,000 jobs for the month of December, keeping the unemployment rate steady at 3.7%. The data also revised the previous months' job counts, showing that 2.7 million jobs were added in 2023, with an average of 225,000 jobs per month. The market reacted with stock market futures sliding and Treasury yields rising following the report. Job gains were seen in various sectors, including government (52,000 jobs), healthcare (38,000 jobs), leisure and hospitality (40,000 jobs), social assistance (21,000 jobs), and construction (17,000 jobs). Conversely, transportation and warehousing experienced a loss of 23,000 jobs. Inflationary pressures persist in the labor market, as average hourly earnings rose by 0.4% on the month and 4.1% from a year ago, exceeding estimates. The report challenges the expectation of a more relaxed monetary policy from the Federal Reserve, as the decision of when to cut policy rates remains uncertain. Despite concerns about a potential economic slowdown, the U.S. economy continues to demonstrate resilience, with solid economic growth and robust consumer spending during the holiday season. Stay tuned for further updates.