U.S. NFP Beat Expectations With 292K Added Jobs in December

The U.S. non-farm payroll showed a much better than expected headline figure: 292K jobs were added in December. The ADP report estimated 257K jobs were added and the market expectations were set much lower at 203K for December. The growth in wages was set at 2.5% even though wages didn’t budge on a month over month rate. There were also upward revisions of 50K for the past couple of months. The main sectors that expanded were in professional and business services, construction, health care, and food services and drinking places, while mining kept losing jobs. The rate of unemployment remained unchanged at 5%. The U.S. dollar kept falling against the Yen but rallied against other majors; gold and silver changed course and fell.

The U6 unemployment measurement, a broader measure of unemployment, also remained unchanged at 9.9%. In terms of revisions, there was a total upward revision of 50K for November and October combined.

U.S.Labor Jan 9 2016

Source: BLS

In December, the rate of U.S. unemployment was 0.6 percent points below the rate recorded in December 2014.

The number of unemployed persons also (7.904 million) declined by 20K in December compared to the previous month. The civilian labor force grew again by 466K. So there was a gain in number of people participating in the labor force and modest fall in the number of unemployed. Thus, the participation rate inched up to 62.6%.

Finally, wages grew in December compared to November – the hourly earnings reached $25.24 per hour — a slip of 1 cent or 0.04%; but wages rose by an annual gain of 2.5%, year on year.

Bottom line

The recent NFP presented another strong report with gains in jobs, higher participation rate and stable unemployment. Wages: While they didn’t pick up on a month-to-month level, they still show an annual gain of 2.5%. If wages, however, don’t pick up to higher levels, this could call into question any future tightening by the Fed. This could also explain the recent drop in gold and silver prices.

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