Nonfarm payrolls rose by 148,000, less than expected, in the initial estimate for December, but the increase was hardly “weak.” There is a fair amount of noise in the monthly figures, but the underlying trend is lower. Despite a tight job market, average hourly earnings were up just 2.5% year-over-year.

Prior to seasonal adjustment, holiday payrolls (retail, couriers) rose by 202,100 (vs. 283,200 a year ago), but November was a lot stronger (+531,500 vs. 2016’s +438,100). Private-sector payroll growth in 2017 was about the same as in 2016, but that was due largely to a decline in the unemployment rate (to 4.1%, from 4.7% a year ago). The unemployment rate cannot fall forever. A steady unemployment rate would be consistent with monthly growth in nonfarm payrolls of less than 100,000.

Scott Brown
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Other signs of labor market slack, such as involuntary part-time employment, have continued to improve, consistent with tighter job market conditions. More firms are reporting difficulties finding qualified workers.

Scott Brown
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