EmailYesterday's trade had a familiar look to it, with the market opening lower on the back of eurozone concerns and then seemingly setting those concerns aside after European markets closed and finishing higher.
The gains in the broader market were not large. The S&P 500 increased 0.3%. Nonetheless, the resilience of the U.S. equity market made a large statement of relative strength in the face of ongoing macro uncertainty.
Not surprisingly, there was a reserved tone in the futures trade ahead of the December employment report. That was the case even though most European markets were trading with a positive bias, seemingly ignoring the 7-handle on the Italian 10-year note (now 7.08%).
A better-than-expected business climate indicator for December reportedly served as the catalyst for buying interest in European markets.
The focus, though, has now turned to the employment situation in the U.S. -- and that situation can be adequately described as improving.
Nonfarm payrolls in December increased by 200,000 (Briefing.com consensus 150,000) while private payrolls jumped by 212,000 (Briefing.com consensus 170,000). Revisions to nonfarm payrolls for October and November were minimal and basically canceled each other out, so there isn't any real difference from what had been known about those months.
Other signs of improvement in December came in hourly earnings rising an expected 0.2% after being flat in November; the average workweek ticking up 0.1 to 34.4 hours (Briefing.com consensus 34.3); and the unemployment rate dipping 0.2 to 8.5% (Briefing.com consensus 8.7%).
There were 50,000 fewer people in the labor force, although the participation rate held steady at 64.0%.
Including the drop in the labor force, the number of unemployed declined by 226,000, meaning the number of employed workers in the civilian labor force increased by 176,000.
The percentage of workers unemployed for 27 weeks or more fell slightly to 42.5% from 43.1% while the U6 unemployment rate, which accounts for marginally attached workers as well, dropped to 15.2% from 15.6%.
The December employment report isn't necessarily a table-pounding report in and of itself. It shows there is still a long way to go to the point where anyone can say the U.S. labor market is unquestionably strong.
The important takeaway today is that the December employment report shows the labor market is improving and that trend dynamic should not be understated. It is an essential component for restoring confidence for consumers and businesses alike that has a positive feedback loop.
Accordingly, we won't label this report as being strong, but we will call it a positive report for the strongest element driving economic growth, which is the labor market.
The S&P futures ticked up a bit on the headline results, but have since pulled back and are pointing to a relatively flat start for a market that has seen an otherwise encouraging week of U.S. economic data.
--Patrick J. O'Hare, Briefing.com
Patrick J. O'Hare is Chief Market Analyst for Briefing Research, Briefing.com's institutional research service. To request a free trial, please email researchsales@briefing.com.
