The Bureau of Labor Statistics (BLS) reported that there were 223,000 jobs created in December, which was stronger than expectations of 200,000 job gains. Revisions to the data from October and November cut 28,000 jobs in those months combined. The unemployment rate declined from 3.6% to 3.5%.

What’s the bottom line? There are two reports within the Jobs Report and there is a fundamental difference between them. The Business Survey is where the headline job number comes from and it's based predominately on modeling. The Household Survey, where the Unemployment Rate comes from, is done by actual phone calls to 60,000 homes.

The Household Survey also has a job loss or creation component, and it showed there were 717,000 job creations, which is a pretty big disparity from the headline number of 223,000 job gains. When we look deeper at the numbers, of the 717,000 job creations in the household survey, 679,000 were from part-time workers and 380,000 represent multiple job holders. This means the job creations that were reported could reflect a lot of holiday hires or people getting part-time seasonal work, making the report weaker than the headlines suggest.

In addition, average hourly earnings were up 0.3% in December and 4.6% year over year, which is down from the previous report. Average weekly earnings only rose by 0.2% last month and 3.1% year over year. Average weekly earnings measure actual take-home pay because the data factors in hours worked, which reached the lowest level since 2020. This cut in hours would actually equate to a significant number of jobs lost.

The Stock and Bond markets both reacted positively on Friday to the data on wage growth, as it reflects less wage-pressured inflation, which is what the Fed is looking for.

And the Fed was certainly watching last week’s labor market data closely, as the minutes from their December meeting showed that officials are committed to maintaining a restrictive policy stance until the incoming data provides confidence that inflation is on a sustained path to 2%. Members believe that this is likely to take some time and cautioned, based upon historical experience, against prematurely loosening monetary policy.