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.”
Average hourly earnings rose a larger-than-forecast 0.6% in December from the prior month, while pay climbed 4.7% from a year earlier. Though rapid inflation is taking a big bite out of those gains, the sustained wage increases highlight employers’ willingness to pay more to attract and retain workers.
The survey period for the jobs report ended mid-month, so Omicron-related impacts later in December will be reflected in the January report.The moderate advance in December was led by leisure and hospitality payrolls, which climbed 53,000. Professional and business service employment rose, while retail trade payrolls declined.
The report also includes routine revisions to the seasonally adjusted household survey data over the past five years. That survey is used to calculate statistics like the unemployment rate and labour force participation.