Refinitiv Newscasts - U.S. adds 223K jobs in Dec; wage growth slows

Recruit Holdings

06/01/2023 18:25

Click the following link to watch video: https://share.newscasts.refinitiv.com/link?entryId=1_xfp320rp&referenceId=tag:reuters.com,2023:newsml_RW086406012023RP1_930&pageId=RefinitivNewscasts
Source: Reuters

Description: U.S. employers added jobs at a solid clip in December, pushing
the unemployment rate back to a pre-pandemic low of 3.5% as the labor market
remains tight, but Federal Reserve officials could draw some solace from a
moderation in wage gains. This report produced by Chris Dignam.
Short Link: https://refini.tv/3GO45TL

Video Transcript:

The US economy added 223,000 jobs in December, pushing the unemployment rate
back down to 3.5%, as the labor continues to show resilience despite the
Federal Reserve's efforts to slow economic growth in its fight against
inflation. But the Labor Department's closely watched employment report on
Friday marked a small decrease from the 256,000 jobs gained in November, which
was revised down from the initial estimate of 263,000. Glassdoor's Chief
Economist Aaron Terrazas explains.

I mean, today's jobs report shows that the labor market is slowing but not so
dramatically and not crashing, more importantly. There have been so many fears
that higher interest rates, high-profile layoffs would lead to a really
dramatic crashing with market and that's not what we're seeing. Job growth
remained robust. It's above its long-term trend but down from November. More
importantly, the unemployment rate fell. It's now back at the lows that it has
touched this cycle. And equally, wage growth slowed. I think that final point
is what most economists were hoping to see, and particularly inflation hawks.
Wage growth slowed to 4.6%, which is the slowest we've seen since August of
2012.

US stocks opened higher on the deceleration in wage growth as investors hoped
it would reduce the risk of the Fed lifting interest rates further and for
longer.

I think there was fears in some respect that this would really be a blow-up
report. It was a good report. It wasn't a blow-up report. And so, I think kind
of that's how we're seeing markets react in this relatively muted fashion. On
top of that, there were promising signs in that slowing wage data. And I think
that's a hopeful signal for markets. We can't get too far ahead of ourselves.
It's easy for markets to get ahead of themselves with any hint of positive
data. But certainly, the trend is moving in the right direction for the Fed.

Wage growth could pick up in January as several states raised their minimum
wage and most workers across the country get cost-of-living adjustments. The
trend in employment growth, however, could slow significantly by midyear as
the Fed's rate hikes make credit more expensive, weighing on consumer spending
and ultimately business investment