This morning's jobs report is good enough, but the market may
not show much excitement as it would have had it not learned on
Thursday that the Fed may not keep buying bonds forever. We all
knew that the Fed will have to change course some day.
But Thursday's minutes of the last Fed meeting showed that 'many'
FOMC members expected the bond purchases to stop or slow before the
end of 2013. That may be a bit too soon for many investors' tastes
and will likely dampen their enthusiasm for today's jobs
report.
But irrespective of what this morning's December non-farm payroll
report tells us about the likely course of Fed policy, it
nevertheless provides a reassuring read on the nation's labor
market. We got a roughly in-line with expectations monthly jobs
tally of 155K. While the consensus estimate did not rise much
following the strong report from ADP on Thursday, the 'whisper'
expectation was for a bigger number.
The revision trend was on the positive side, with November revised
to 161K from 146K and October raised to 137K from 138K. The
unemployment rate remained unchanged at 7.8%; the November
unemployment rate was originally reported at 7.7%.
??????Private sector jobs totaled 168K in December, modestly
below November's 171K level (the November was revised upwards from
147K). The December gains were concentrated in healthcare, food
services, construction, and manufacturing. Jobs in the healthcare
sector increased by +45K in December, bringing the full-year 2012
total to +338K.
Construction jobs were up +30K in December after a drop the month
before. Manufacturing jobs were up +25K in December, with full-year
2012 job gains in the factory sector at 180K, mostly earlier in the
year. The average work week increased by 0.1 hours to 34.5
hours.
Average hourly earnings increased by 7 cents to $23.73, with
full-year 2012 average hourly earnings up 2.1%. The labor force
participation rate remained unchanged at 63.6% in December.
Today's report shows that the average monthly jobs tally has been
fairly stable in the last two years. The monthly job gains tally in
2012 averaged 153K, the same pace as in the year before.
While this is quite an underwhelming performance for the
economy, it does show that negative backdrop of 'Fiscal Cliff'
related uncertainty has not had much of a dampening effect on
hiring trends. And that has to count as a positive in these times
of uncertainty.
It's not easy to handicap the course of Fed policy from this jobs
report, but we shouldn't expect any imminent changes given this
month's unemployment rate at 7.8%. That said, minutes of the Fed's
December meeting show a less than unqualified support for the
central bank's expanded bond-purchase program. It may be signaling
a rougher patch for the market in the coming months if the QE
program has to end this year, as the minutes show.
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