U.S. payrolls rise below expectations in December

U.S. payrolls rose below expectations in December. Payrolls were up by 148k, as compared with survey expectations of a rise of 190k. Hiring in private sector grew 146k, as compared with consensus expectations of 193k. Meanwhile, government payrolls rose 2000. Goods producing employment rose robustly in the month, rising 55k and led by a 30k rise in construction employment. Employment in manufacturing also performed well, rising 25k. Meanwhile, services employment slowed to 91k from 176k.

The jobless rate remained the same at 4.1 percent in November. Household survey employment was up 104k, while the labor force rose 64k. Average hourly earnings rose a comparatively strong 0.3 percent in December and accelerated to 2.5 percent year-on-year. For 2017 as a whole, the U.S. economy generated nearly 2.2 million jobs. The jobless rate dropped 0.6 percentage points, double the rate of decline in 2016.

As the labor market approaches full employment, analysts will have to adjust down the pace of job growth the economy can achieve, noted TD Economics in a research report. Maintaining a rate of 150k jobs per month would be enough to exert downward pressure on the jobless rate.

The low jobless rate should signify more rapid wage growth as employers offer higher compensation in order to attract and retain talent. They would have additional room to do so with the cut in the corporate tax rate.

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