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U.S. Posts Another NFP Miss but Earnings, Jobless Rate Suggest Ongoing Pressures

Economic IndicatorsJan 07, 2022 08:42AM ET
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© Reuters.

By Geoffrey Smith 

Investing.com -- The U.S. economy posted fewer jobs than expected for a second straight month in December, but the government's monthly report still pointed to ongoing inflationary pressures coming from the labor market.

The Labor Department said nonfarm employment rose by only 199,000 through the middle of the month. That's only half the expected 400,000 and a sharp contrast to the 807,000 gain in private payrolls reported in ADP's concurrent survey earlier in the week.  The disappointment was only partly mitigated by an upward revision of 39,000 to November's payrolls number.

However, there was still plenty of evidence that labor market tightness is feeding through into higher wages. Average hourly earnings rose 0.6% on the month, faster than November's rate of 0.4%, which was also revised higher. Analysts had forecast growth of 0.4%.  The unemployment rate, meanwhile, fell below 4% of the workforce for the first time since March 2020, and the broader U6 unemployment rate, which captures a broader range of underemployment, fell sharply to 7.3% from 7.7% a month earlier. 

"There are methodological issues with the establishment survey," said Marc Chandler, managing director of Bannockburn Global Forex via Twitter (NYSE:TWTR). "Seasonal patterns have been neutered by Covid and fewer companies (are) participating."  

Chandler suggested that the Fed is focusing more on inflation than on jobs numbers right now, and that next week's data are likely to show another rise in inflation in December.

"The Fed is on course to hike earlier rather than later," tweeted Societe Generale (OTC:SCGLY) Macro Strategist Kit Juckes.

U.S. stock futures reacted negatively to the news, reversing tentative gains made in the overnight session on perceptions that the data will embolden the Federal Reserve to tighten monetary policy more and faster than thought earlier. By 8:45 AM ET (1345 GMT), Dow Jones Futures were down 58 points, or 0.2%, while the S&P 500 Futures contract was also down 0.2% and Nasdaq 100 Futures were down 0.6%. 

Other risk assets also suffered, with Bitcoin falling 4% to trade close to a four-month low of $41,206 that it hit earlier in the session. 

With the exception of the headline jobs number, the report broadly corroborates the picture painted earlier this week by other economic data that showed companies struggling to retain staff despite rapidly rising labor costs. The Labor Department's Job Openings and Labor Turnover survey showed employees quit their jobs at a record rate in November - with analysts surmising that those that departed went mostly to higher-paid jobs elsewhere. The Institute of Supply Management's non-manufacturing activity index, meanwhile, was skewed sharply higher by the prices subindex, which is closely correlated to labor costs.

The report also hinted at the ongoing structural labor market problems left behind by the pandemic, one of which has been the disproportionate pressure on women to drop out of the labor force due to school closures and childcare requirements (as well as the disproportionate impact of the pandemic on services, where female participation is higher than in manufacturing). Liz Ann Sonders, chief investment strategist with Charles Schwab (NYSE:SCHW), noted that 152,000 men took jobs in the month, compared to only 66,000 women. 

 

U.S. Posts Another NFP Miss but Earnings, Jobless Rate Suggest Ongoing Pressures
 

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Comments (12)
Iyarin Boonnum
Iyarin Boonnum Jan 07, 2022 10:23AM ET
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We cant trust NFP in this govt. Distort data for 2 years to manipulate market as they want to do.
Iyarin Boonnum
Iyarin Boonnum Jan 07, 2022 10:21AM ET
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US stock is ending of wave 5. MONEY WILL MOVE TO EM.
ben sc
ben sc Jan 07, 2022 10:09AM ET
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maybe mandates are hurting the economy and contributing to inflation. and they're not stopping the spread. get back to work, get back to normal. more workers=more production. why can't this admin figure it out?
Jay Garrelts
Jay Garrelts Jan 07, 2022 10:09AM ET
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Im sure Trump and Joe Doubling the money supply has nothing to do with it lol
Mitchel Pioneer
Mitchel Pioneer Jan 07, 2022 9:35AM ET
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Let the fraud and criminal manipulation begin, as the curtain rises on another day in the laughingstock of the financial world.
Jack lee
JackLee Jan 07, 2022 8:56AM ET
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Is it bullish for the commodity market this data
Alpha Media
Alpha Media Jan 07, 2022 8:56AM ET
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Neutral.
Tom Sc
Tom Sc Jan 07, 2022 8:52AM ET
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we are about 4 million nominal jobs short. and between 2018 and 2020 there was 4 million jobs...about 2 million a year is normal. so in a sense we are closer to 8 million jobs short and we call this a great economy?
Tom Sc
Tom Sc Jan 07, 2022 8:52AM ET
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when I mean short I mean since prepandemic.
Bill Ha
Bill Ha Jan 07, 2022 8:52AM ET
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Biden economic plan working great.
Matias Marquez
Matias Marquez Jan 07, 2022 8:49AM ET
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bullish. medias sell trash
CH Sabir Hussain
CH Sabir Hussain Jan 07, 2022 8:48AM ET
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saBir
Mitchel Pioneer
Mitchel Pioneer Jan 07, 2022 8:47AM ET
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Time to call in the cavalry to save the laughingstock of the financial world from another loss.
Work inProgress
Work inProgress Jan 07, 2022 8:47AM ET
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These fake news from investing make traders loose a lot. It always happens the other way around... Take a look on the NFP payroll reading... High read bulish for USD, low read bearish for the USD. Well, there's a low read and the dólar is going up crazy... waist of time in here
Alpha Media
Alpha Media Jan 07, 2022 8:47AM ET
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Don’t stone the messenger. If you were keen you’d note the bearish NFP news was neutralized by the bullish ubemployment rate news. In any case you shouldnt be taking positions based on what the news say. There is a lot more info to process for you to succeed in these markets. A number on https://investing.com will not make you a good trader.
Ronald Warren
Ronald Warren Jan 07, 2022 8:47AM ET
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As you said,"There is more to trading than the news." Lately, I've been using a dart board with green and red darts to make my moves.
Alpha Media
Alpha Media Jan 07, 2022 8:47AM ET
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Ronald Warren lol. Any methodology is fine as long as it is profitable. There is mo magic bullet to make one successful in these markets. You just do what works for you even if it doesn’t make sense to others.
Giovanni Di Carlo
Giovanni Di Carlo Jan 07, 2022 8:47AM ET
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Interesting comment, can you suggest some resource where i can find this other info that we need to take into account? I probably don't search the right things on internet and i can't find the answer for my question, thanks in advance if you can help me.
 
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