Employment Surprise

Employment Surprise

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  • The U.S. labor market saw a rise in December as the unemployment rate slid back to a pre-pandemic low of 3.5%, 0.2 percentage point below the expectation. The nonfarm payrolls also increased by 223,000 for the month, above the Dow Jones estimate for 200,000.
  • The leisure and hospitality sector added 67,000 jobs, followed by healthcare (55,000), construction (28,000) and social assistance (20,000). Although the Federal Reserve's efforts to tackle inflation by raising interest rates did not fully pay off, wage growth was less than expected and an indication of declining inflation pressures. It is yet to be seen if the Fed will further increase the interest rates.

Why it matters

The Fed has raised its benchmark interest rate seven times in 2022 till 4.25%. It is also likely to increase rates another quarter-percentage point at its next meeting, which concludes on 1st Feb.


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