December nonfarm payrolls rose 18,000. This was less than an expected 70,000 increase but nonetheless still reflects an increase. The November payroll gain was revised to show an increase of 115,000 from a previously reported 94,000 increase. That is an upward revision of 21,000.
Hourly earnings rose 0.4%. This follows a gain of 0.4% in November and 0.1% in October and pushed the year-over-year increase to 3.7% from 3.6%. The recent gains in earnings, along with the increase in payrolls, keeps consumer spending power rising at a bit over a 4% annual rate (not inflation adjusted).
The breakdown of the employment data is not surprising. Construction and manufacturing employment fell while services and government employment rose, continuing both short-term and long-term trends.
The data are disappointing compared to expectations, and they will undoubtedly provide more fuel for bearish headlines and talk of recession, but payrolls still aren't receding and certainly are not declining at the 150,000 to 200,000 pace seen as recessions develop. In our view, they continue to reflect an economy that is muddling along at very sluggish growth rates, but the financial markets are nonetheless likely to view the data as very weak, as the recent tendency is to view all data with extreme caution and on the bearish side.
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