Confirmed! US December non-farm payroll exceeded expectations

The December non-farm payroll report showed that 256,000 jobs were added, far exceeding market expectations. Industry-specific data also demonstrated robust growth, with 46,000 jobs added in healthcare, 43,000 in leisure and hospitality, 33,000 in government, and another 43,000 in retail. Meanwhile, manufacturing saw a significant decline, losing 87,000 jobs, marking the fourth decline in the last five months. The unemployment rate fell to 4.1% in December, lower than the 4.2% in November and below market expectations, reflecting the resilience of the U.S. labor market.

In addition, wage growth showed signs of slowing down, with average hourly earnings increasing by 3.9% year-over-year and 0.3% month-over-month. This slowdown in wage growth helped alleviate concerns about wage-driven inflation. Notably, despite the low unemployment rate, both long-term unemployment and part-time employment numbers declined, signaling stable growth in the labor market.

The strong non-farm payroll data further alleviated concerns about a U.S. economic recession and reinforced expectations that the Fed will maintain a cautious monetary policy. Following the release of the data, market expectations for Fed rate cuts dropped significantly, with the latest forecast predicting the next rate cut to occur in October. U.S. stock futures fell, the U.S. dollar index rose, and the 10-year U.S. Treasury yield briefly reached a new high.

Impact of Non-Farm Payroll Data

The December non-farm data provided solid support for the U.S. economy. Fed Chairman Jerome Powell had previously stated that as long as the labor market remains stable and the economy stays healthy, the Fed can maintain a cautious monetary policy.

Although inflation remains above the Fed's target, the recent slowdown in wage growth and the strength of the labor market suggest that the Fed is in no rush to cut rates. Chicago Fed President Goolsbee mentioned that, despite the strong employment data, as long as inflation remains stable, interest rates could be significantly reduced over the next 12 to 18 months.

While manufacturing showed weakness, the growth in other industries still demonstrates economic resilience. In the coming months, as more economic data is released, market expectations for the Fed's policy and the inflation trajectory will continue to evolve.