Africa-Press – South-Africa. US job growth stayed solid last month and the unemployment rate fell while wage gains cooled, indicating a resilient labour market that nevertheless may give room for the Federal Reserve to further slow interest-rate hikes.
Nonfarm payrolls increased 223 000 in December, capping a near-record year for job growth, a Labor Department report showed Friday. The advance followed a revised 256 000 gain in November.
Average hourly earnings rose 0.3% from a month earlier and 4.6% from December 2021 after a downward revision to November. The deceleration is likely welcome news for Fed officials, who see wage pressures, particularly in the service sector, as a key hurdle to achieving their 2% inflation goal.
The unemployment rate decreased by 0.1 percentage point to 3.5%, matching a five-decade low, as participation inched higher. The median estimates in a Bloomberg survey of economists had called for a 203 000 advance in payrolls and for wages to climb 0.4% from the prior month.
The job gains were led by health care and social assistance, leisure and hospitality, and construction.
US stock futures rose and Treasuries rallied as investors speculated the easing in wage pressures would lead the Fed to pursue less restrictive policy in the coming months.
The figures underscore both the enduring strength of the jobs market and how a persistent imbalance between the supply and demand for labor is keeping upward pressure on earnings. That said, the welcome uptick in participation paired with a slowdown in wage growth suggest some of the tightness in the labor market is starting to unwind.
A sustained deceleration in wage growth could offer some comfort to central bank officials that a key part of the inflation puzzle is losing steam.
Looking ahead, central bank officials see the unemployment rate rising by about a full percentage point this year, while many other economists predict the US will slip into a recession.
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