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NFP should calm some concerns about near-term economic outlook - RBC

US jobs surged in December to 312K, surpassing expectations of a 177K gain. According to Nathan Janzen, Senior Economist at RBC, the data should help ease some short-term concerns about the economic backdrops seen in the near-term. He explained that the unemployment rate is still historically low despite rising from 3.7% to 3.9%. 
Key Quotes: 

“The headline 312k gain in payroll employment, plus 58k worth of upward revisions to the prior two months should calm some concerns about the near-term economic backdrop.”

“Evidence continued to mount that tight labour markets are giving workers more bargaining power.  Wage growth unexpectedly ticked up to 3.2% on a year-over-year basis—a new cycle high and up from 2.8% in Q3.   Combining rising hours worked and wages leaves a pretty solid household income backdrop still in place.”

“The economy still looks to have ended 2018 growing at an above-potential rate — just not quite as strong as the unsustainable 4% pace over Q2 and Q3.”

“The list of things that can go wrong at this (mature) point in the economic cycle is probably longer than the list of things that can go right, but current conditions still argue that there is room for official interest rates to ultimately grind gradually higher.”


 

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