- December saw another solid US payrolls gain of +252k. The twelve month rolling average now stands at +246k per month, its highest level since mid-2000.
- The unemployment rate fell to 5.6%, the combined result of the increase in jobs and a decline in the participation rate which fell 0.2 percentage points to 62.7.
- Jobs growth was broad-based with the construction sector posting a particularly large increase of +48k over the month.
- Wage growth was weak with average hourly earnings down -0.2% over the month. Following the large +0.4% increase last month a weak result was on the cards but the pullback was disappointing.
- The improving labour market is a key part of our expectations of solid GDP growth this year. The trend improvement in jobs growth supports that story. Weak wage growth takes some of the gloss off that story but at the same time confirms the FOMC can remain patient in normalising monetary settings.