Pennsylvania Trust

Payroll Numbers Surge

Payroll Numbers Surge


Employers added the most workers since February as wage growth increased and labor-force participation rose reflecting a healthy job market in the face of recessionary concerns that have recently surfaced.

  • Non-farm payrolls rose 312K in December (184K was consensus guess) and the prior 2 months were revised up by 58K.
  • Average hourly earnings increased by 0.4%, which was enough to push the annual growth rate up to a near-decade high of 3.2%, from 3.1%.
  • The unemployment rate rose from 3.7% to 3.9%
  • The labor force participation rate increased to 63.1% from 62.9%.  It appears that increased wage potential is drawing people back to the active labor force in large numbers.
  • Average hourly earnings rose 3.2% which was stronger than the 3.0% expected.

While these employment numbers tend to be viewed as lagging indicators (compared to manufacturing which is a leading indicator), this number should help generally quell concerns about economic momentum. That said, one underlying number may prove to be a headline risk going forward: the 0.2% tick up in unemployment. Historically, a trough in the unemployment rate tends to be a reliable predictor of a business recession.

While bond yields have retreated on the good news (higher yields), the market will pay close attention to today’s unique event featuring the three most recent Federal Reserve Chairs as both yesterdays disappointing manufacturing number and today’s solid employment number will be hot topics.

Disclosure: This Commentary represents a review of topics of possible interest to Pennsylvania Trust’s clients and is not personalized investment advice. It contains Pennsylvania Trust’s opinions, which may change following the date of publication. Information obtained from third-party sources is assumed to be reliable but is not guaranteed. No outcome – including performance – is guaranteed, due to various uncertainties and risks. This document is not a recommendation of any particular investment. Investment decisions for clients are made on an individualized basis and may be different from what is expressed here. Past performance is no guarantee of future results.