For the second consecutive month, the US posted NFP data that fell below market expectations.
The Non-Farm Payrolls (NFP) data showed that employment numbers only rose by 199,000 in the month of December which was less than half the 400,000 expected by market analysts.
The world’s largest economy still has ongoing inflationary pressures weighing upon it. Although there was some mitigation in the form of November’s NFP figure being upwardly revised by 39,000, the latest set of NFP data will worry the US Fed.
December’s NFP numbers are a sharp contrast to the 807,000 increase in private payrolls reported in ADP’s concurrent survey earlier during the week.
There was some good economic news for the US though. The US unemployment rate dropped below 4% of the workforce for the first time since March 2020. Meanwhile, the broader U6 unemployment rate which encompasses a broader range of underemployment declined sharply from 7.7% a month in November to 7.3% last month.
Interest Rate Hike?
Friday’s mixed data of slashing the unemployment rate but only increasing the number of jobs by less than half of what was expected raises further questions on whether or not there will be an interest rate raise this month.
Societe Generale (OTC: SCGLY) Macro Strategist Kit Juckes. tweeted:
“The Fed is on course to hike earlier rather than later,”
This upcoming week Wednesday sees the release of the eagerly awaited CPI data. This could certainly provide the incentive to raise interest rates should inflation once again continue to push higher.
