December Jobs Report: Better Than Expected, But Experts’ Views Remain Mixed

2023’s final jobs report came in much better than expected, with the December readout topping estimates in just about every way. But while the report signaled continued strength for American workers, experts were hardly in unison about what this portended for the economy and Federal Reserve actions going forward. The Labor Department reported Friday that nonfarm payrolls grew by 216,000 in December, easily topping expectations for 175,000. The figure marked the 36th straight month of jobs growth. Here’s a quick look at the most pertinent details, most of which exceeded expectations and illustrated a still-resilient economy.

• December payrolls: +216,000 (vs. +175,000 est.)
• December unemployment: 3.7% (vs. 3.8% est.)
• December hourly earnings: +0.4% (vs. +0.3% est.)
• November payrolls (revised): +173,000 (vs. +199,000 previously)
• October payrolls (revised): +105,000 (vs. +150,000 previously)

“With a mild winter (so far) and jobs numbers typically bolstered by seasonal hiring, we anticipated a strong and better-than-consensus number and here it is,” says Lindsay Rosner, Head of Fixed Income Multi Sector Investing, Goldman Sachs Asset Management. “This number does question the confidence of the market around the March cut. We’ve got three inflation prints between now and the March meeting. Every number counts.”

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Digging deeper into the December jobs report, notable gains were made in government (+52,000), health care (+38,000 jobs), social assistance (+21,000), and construction jobs (+17,000). The greatest losses were seen in temporary help services (-33,000), as well as transportation and warehousing (-23,000).

Expert Reactions to December’s Jobs Report

Here’s what strategists, financial managers, and other experts had to say about the November employment situation:

Josh Jamner, Investment Strategy Analyst, ClearBridge Investments

“While the headline figures were positive with a solid jobs number and rising wages, the details of the jobs report present a more mixed picture and the continued trend of substantial negative revisions is concerning. There have been cumulative revisions of -427,000 to the headline prints over the last 12 months—a dynamic that historically has presaged economic slowdowns. This suggests that when we look back on today sometime in the future, the health of the labor market may not quite as strong as we currently believe.”

David Russell, Global Head of Market Strategy at TradeStation.

“Today’s report was a trifecta of hawkish news, with payrolls and wage growth higher than expected and unemployment light. It dampers some hopes of a super dovish Fed but doesn’t undo the process of rates coming down this year. Recent manufacturing reports have shown slack in the economy and the ability to grow without inflation. “Good news for Main Street is bad news for Wall Street this morning. But it might not stay that way for long as investors focus on how strong employment can support earnings over time.”

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Stephen J. Rich, Chairman & CEO of Mutual of America Capital Management

“Two consecutive positive jobs reports and solid consumer spending amid easing inflation are welcome news both for consumers and investors. With the Federal Reserve recently signaling three cuts to the benchmark interest rate in 2024 and real GDP continuing to trend upward, a soft landing for the economy appears much more likely. Amid this optimism, we will continue to closely watch factors that could change this narrative.”

Jason Pride, Chief of Investment Strategy & Research, Glenmede

“Today’s report is unlikely to shake the Fed from their pause-for-now approach on interest rates, but some members may start to question if the job market has softened enough. Particular attention is likely to be paid to the wage growth figures, which run the risk of reinforcing services-based inflation which has remained stubbornly above the Fed’s preferred range. This could reinforce how unrealistic the market’s call for 6-7 rate hikes may prove in 2024.”

Sonu Varghese, Global Macro Strategist, Carson Group

“The labor market and economy have normalized and are in a healthy place—not too hot, not too cold. There was some mixed data, including falling participation, but this might be due to the seasonal adjustments. Wage growth was strong, coupled with falling inflation means real incomes continue to move higher—which is good for the economy.”

Michelle Cluver, Portfolio Strategist, Global X

“The strength of this jobs report decreases the probability of a March interest rate cut. Treasury yields increased on its release, putting downward pressure on markets.”

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