There has not been a fall in U.S. non-farm employment since September 2010 and the latest figures for December have kept this trend intact. According to the U.S. Bureau of Labor Statistics, the U.S. economy gained 148,000 jobs in the non-farm sector in December, less than the (median) 190,000 expected and not enough to lower the unemployment rate.
Despite the miss, financial market reaction was muted and U.S. bond yields actually rose a little. The 2 year yield inched up 1bp to 1.96% while the 10 year yield gained 3bps to 2.48%. The U.S currency was slightly stronger against the euro and yen and almost unchanged against the pound. According to cash futures prices, the implied probability of a rate rise by the U.S. FOMC at its March meeting was unchanged at 67%.
Revisions to figures from November and October also had a mildly dampening effect. While November’s employment increase was revised up from +228,000 to +252,000, October’s number was revised down from +244,000 to +211,000.
After the revisions, the unemployment rate remained unchanged at 4.1% even as 40,000 people either found work, retired or stopped looking for work. The participation rate remained unchanged at 62.7% for the third month in a row.