Unemployment ticked higher in December, but more Americans were looking for work. Here’s what it means:
What is the Non-farm Payrolls report? The Non-farm Payrolls report measures the number of people on the payrolls of all non-agricultural businesses each month. The data represents around 80 percent of workers who produce the Gross Domestic Product of the United States.
What’s happened recently? The Bureau of Labor Statistics reported employers added 156,000 new jobs in December, which was below the 175,000 expected. However, October and November numbers were revised higher by 19,000. Average hourly earnings rose from -0.1 percent in November to 0.4 percent in December. In addition, average hourly earnings rose 2.9 percent year-over-year, the fastest pace since June 2009.
What’s the bottom line? Wage growth is a positive sign for American workers, especially for those looking to buy a home. And the unemployment rate is still near nine-year lows, which is good news because it means working families are experiencing what is considered full employment. This could cause problems for the new Trump administration, however, since a lower unemployment rate means a slower pace of sustainable job growth without driving wages and prices up too quickly. Rapid wage and price escalation could pressure the Fed to switch concerns about deflation to out-of-hand price increases.
I’ll continue to monitor economic reports closely, but if you have any immediate questions, please call or email today.