Payrolls surprise to the upside

Dec Payrolls totaled 200k, 45k higher than expected all aided by a 212k increase in private sector jobs, 34k more than estimated. The prior two months were revised lower by 8k. The unemployment rate fell to 8.5% from an upwardly revised 8.7% in Nov, as the employment survey added 176k jobs and the labor force declined again, this time by 50k and 170k over the past two months. The all in U6 rate fell to 15.2% from 15.6%. Avg hourly earnings rose .2% m/o/m and 2.1% y/o/y, up from 1.9% in Nov but still well below CPI running north of 3%. Mfr’g job gains were 23k, above estimates of 6k and there were job adds in construction, retail, IT, financial, education/health, and leisure/hospitality. Temp jobs fell and local gov’ts too shed jobs. The avg workweek did tick up by .1 and the avg duration of unemployment fell a touch. Bottom line, the best job gain since Sept brings the 2011 monthly average to 137k, very ordinary in a recovery but hopefully Dec begins a new higher level of trend. As we all know though, much of that will be determined by how Europe plays out in 2012 and what spills over to the rest of the world. Some think the US can skirt by a European recession but mathematically that will be tough without some impact.

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