Notably slower wage growth offset a stronger-than-expected December jobs report, sending U.S. stocks higher in early Friday trading.
The U.S. economy added more new jobs than forecast last month, the Labor Department said Friday, but wage growth slowed notably from November, suggesting the gains may not feed as quickly into inflation pressures.
The Bureau for Labor Statistics said 223,000 new jobs were created last month, well ahead of the Street consensus forecast of 200,000. Private payrolls were up 220,000, the BLS said, as the unemployment rate held at 3.7%. The BLS also revised its November jobs addition estimate to 2xxx,000 from its original estimate of 263,000.
The BLS noted that hourly wages were up 0.3%, around half of last month’s gain, and came in light of Street forecasts of a 0.4% gain. On a year-on-year basis, wages were up 4.6%, compared to the 5.1% pace recorded in December, the BLS said.
Minutes from the Federal Reserve‘s December policy meeting, when members agreed to their seventh interest rate hike of the year, indicated “tentative signs that labor market balances are improving”, but noted “large imbalances between labor supply and labor demand, as indicated by the still-large number of job openings and elevated nominal wage growth”.
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U.S. stocks extended earlier gains following the data release, with futures tied to the Dow Jones Industrial Average indicating a 135 point opening bell gain and those linked to the S&P 500 set to rise by 20 points from last night’s close. The The tech-focused Nasdaq was called xxx higher.
Benchmark 10-year Treasury note yields eased 1 basis point to 3.733% while 2-year notes held at 4.479%. The CME Group’s FedWatch suggests a 44% chance of a 50 basis point rate hike early next month in Washington, up from 32.3% last week.
The U.S. dollar index, which tracks the greenback against a basket of six major global currencies, was marked 0.47% higher at 105.531.
Earlier this week, payroll processing group ADP said private hiring accelerated to 235,000 new positions last month, while new applications for unemployment benefits fell by 20,000 to 204,000 over the period ending on December 31.
The Challenger job cuts report for December, however, said layoffs rose 129% from last year to 76,835. JOLTs data for the month of November, however, indicated around 10.45 million open positions, a level that could feed in to pay gains over the coming months.
