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01/07/2011
Due to the forecast of 300K jobs from ADP on Wednesday, expectations for today’s Employment report varied widely. Against a consensus forecast of 150K, the economy added 103K jobs in December. Revisions to prior months added an additional 70K jobs, bringing the total close to expectations. The biggest surprise came from a drop in the Unemployment Rate to 9.4% from 9.8% in November, far below the consensus forecast of 9.7%, and the lowest level in 19 months. Economists suggest that seasonal factors may have played some role in the large decline in the Unemployment Rate, so next month’s results will be highly anticipated. Bigger picture, the economy added an average of about 94K jobs per month in 2010. Over the last three months, the economy added 128K jobs per month, which is roughly the number needed to keep pace with population growth. Historically, a higher level of growth has been required to significantly reduce the Unemployment Rate. Average Hourly Earnings, a proxy for wage growth, matched expectations with a slight increase.
