top of page

Jobs Report Exceeds Expectations

Economic Observer: Up-to-date information on the latest financial news

Overview: It was a quiet week for mortgage markets ahead of key inflation data. Mixed results for the major labor market report released on Friday caused little reaction, and rates ended nearly unchanged.


In December, the economy added 216,000 jobs, above the consensus forecast of 160,000, but the results for prior months were revised lower by 71,000. Health care, government, and leisure/hospitality posted the largest gains, while the transportation/warehousing sectors lost jobs. The unemployment rate remained unchanged at 3.7%, below the consensus forecast of 3.8%. Average hourly earnings, a proxy for wage growth, were 4.1% higher than a year ago, up from an annual rate of increase of 4% last month.

Federal Reserve officials keep a close eye on job and wage growth because they generally raise future inflationary pressures. Monthly job gains of around 100,000 and annual wage growth of around 3% are the Fed's rough benchmarks that would be considered consistent with the Fed's 2% inflation target. In 2023, the economy gained 2.7 million jobs, or a monthly average of 225,000. Along with high wage growth of around 4%, tight labor market conditions help explain why Fed officials remain cautious about cutting the federal funds rate too soon.

A significant economic report released this week from the Institute for Supply Management (ISM) was a little weaker than expected. The ISM Services Index was just 50.6, below the consensus forecast of 52.5. Still, readings above 50 indicate an expansion in the sector, and services have continued to power the economy since the pandemic restrictions have eased.


Job Gains (thousands)

Chart of Job Gains from April to December 2023


Week Ahead

Jan. 11

Consumer Price Index (CPI)

Jan. 15

Markets closed for Martin Luther King Jr. Day

Jan. 17

Retail Sales report


bottom of page