U.S. NFP: Wages Grew by 2.9% — The Fastest Pace Since 2009

The U.S. non-farm payroll fell a bit short of market estimates regarding the headlines figure of number of jobs added: 156K vs an expected growth of 175K (The ADP estimated a gain of 153K jobs) during the month of December; but this headline was overshadowed by the higher than expected growth in wages: 0.4% month over month and a 2.9% annual growth – the fastest pace since 2009. Unemployment rate edged up to 4.7%. The higher growth in wages has vindicated the FOMC’s recent rate hike and could persuade the markets that 3 hikes are plausible this year.   

The U6 unemployment measurement, a broader measure of unemployment, declined again to its lowest level in months of 9.2%. In terms of revisions, there was a total upward revision of 19K for November and October combined.

In December, the rate of U.S. unemployment was 0.3 percent points below the rate recorded in December 2015.

The number of unemployed persons (7.529 million) rose by 120K in December compared to the previous month. And the civilian labor force also increased by 184K. So there was a gain in number of people participating in the labor force and in the number of unemployed. In the end, the participation rate edged up to 62.7%.

Finally, wages rose in December compared to November – the hourly earnings reached $26 per hour — a gain of 10 cent or 0.4%, month over month –higher than expected (exp. were for 0.3% gain); wages grew at an annual rate of 2.9%, year on year.


This jobs report is another indication that the U.S. labor market is tightening and we are finally starting to see a gain in wages. If wage growth continues to pick up, this could lead the Fed to slowly raise rates in the coming months. Despite the slower growth in jobs or modest gain in unemployment, this report was overall solid and clears the path for less monetary stimulus from the Fed.

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