US: Payroll headline soft, but no worries

5 min

Jobs rose by +148,000 in December, short of expectations of +200,000, but it was still a solid report. Construction and manufacturing jobs both rose for the fifth straight month, gaining +30,000 and +25,000, respectively. Retail jobs shrank again, losing -20,000 in December, taking the total in 2017 to -67,000 jobs. By contrast retail jobs grew +203,000 in 2016. The unemployment and labor force participation rates were both unchanged for the third straight month at 4.1% and 62.7%, respectively. Wages rose +0.3% m/m in December, putting the y/y rate back to +2.5%, right in the middle of the three-year range. The ISM manufacturing survey gained +1.5 points to 59.7 in December, with new orders increasing +5.4 points to a very strong 69.4, the highest in 14 years. Eight of the ten compo-nents were above 50 and eight rose last month. The services report fell -1.5 points to 55.9, but all 10 components remained above 50. The trade deficit in goods and services widened from USD48.9bn in October to USD50.5bn in November. Core orders for durable goods slipped -0.2% m/m but remained at a very strong +7.9% y/y. We maintain our forecast of 3-4 Fed interest rate hikes this year.