U.S. jobless rate falls as wages jump, adding pressure on Fed
BNN Bloomberg
The U.S. unemployment rate fell below 4 per cent and wages jumped last month, adding to evidence of a tight labor market that’s expected to help spur Federal Reserve interest-rate liftoff as soon as March despite disappointing payroll growth.
The U.S. unemployment rate fell below 4 per cent and wages jumped last month, adding to evidence of a tight labor market that’s expected to help spur Federal Reserve interest-rate liftoff as soon as March despite disappointing payroll growth.
The jobless rate fell to 3.9 per cent and monthly wage growth accelerated in December, a Labor Department report showed Friday. A 199,000 increase in nonfarm payrolls followed upward revisions in the prior two months, and the labor force participation rate was unchanged.
The latest employment numbers suggest that despite still-robust labor demand, the factors that have kept a lid on hiring throughout the fall -- a lack of childcare, virus fears, large savings cushions -- persisted late last year. The omicron variant, driving COVID-19 cases to record highs in recent days, is another wrinkle and poses a risk to the pace of employment growth in early 2022.
“Both sides of today’s report agree the labor market is recovering,” said Nick Bunker, economic research director at Indeed. “The disagreement is just over how fast it is happening.”
Against a backdrop of accelerating inflation, the drop in the jobless rate and faster wage growth may justify a quicker tightening of monetary policy. Fed officials noted at their December meeting that it may become warranted to increase that rate “sooner or at a faster pace than participants had earlier anticipated.”
