Today’s jobs report beat most economists’ expectations.
US companies added 252,000 payrolls in December. And they added 32,000 more in November than previously thought. Meanwhile, the unemployment rate fellto 5.6% from 5.8%, which was lower than the 5.7% level expected.
Pantheon Macroeconomics Ian Shepherdson thinks this was a pretty good jobs report. However, he warns that the naysayers will point to the negatives.
Specifically, they will point out that the umemployment rate fell becauce the labour force participation rate fell to 62.7% from 62.9% and household employment — which is used to calculate the unemployment rate — increased by just 111,000.
“Details of the unemployment numbers – household jobs up only 111K, participation down a tenth – will doubtless be cited by bears as evidence that all is perhaps not as good as the payroll numbers look; ignore them,” Shepherdson writes.
“All the household numbers are much more volatile than payrolls and cannot be taken remotely seriously month-to-month. All that matters here is that if payroll growth remains at anything like its current pace, the Fed will very soon have to confront an unemployment rate hitting its view of the sustainable rate.”
Shepherdson does note that the soft wage gains was “the only disappointing aspect of this report.” Read BI’s take here.
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