Announced this morning, the economy added only 199,000 jobs in December, much less than expected. The Leisure and Hospitality industry added just 53,000 jobs, contrary to the higher reading in the ADP report earlier this week, and the Retail Trade industry and Government jobs were again weak. The Unemployment Rate decreased three tenths to 3.9% and the Labor Force Participation Rate was 61.9%. Average Hourly Earnings increased 4.7% on an annual basis, higher than expected, and Average Weekly Hours were 34.7, the same as the revised figure from the previous month. Overall, a weak headline number coupled with a drop in the unemployment rate to below 4%, almost back to pre-pandemic levels. Companies continue to pay up for workers they can find with average hourly earnings staying in the high 4% range on an annual basis, above the 50-year average for wage growth. The Federal Reserve should remain on track with their transition to taper back asset purchases, proceed with interest rate increases in 2022, and even consider rolling bonds off their balance sheet which they discussed at their most recent meeting. In all, U.S. 10-year treasury yield ticks higher following the report and equity futures are lower as we head into the market open.
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