US NFP: Wage growth loses traction amidst solid jobs creation – UOB

Senior Economist at UOB Group Alvin Liew reviews the latest US Nonfarm Payrolls published on January 6.

Key Takeaways

“The US ended 2022 exceeding expectations with 223,000 jobs added in Dec while the jobless rate receded to 3.5%, matching the 50-year low level, as the unemployed numbers fell by 228,000 to 5.77 million. Wage growth continued but the pace was below expectations at 0.3% m/m, 4.6% y/y (below Bloomberg estimates and Nov prints).”

“Jobs creation at a reduced pace (compared to 1H 2023) and wage growth back below 5% may give the Federal Reserve (Fed) some comfort the risk of wage price spiral is not imminent but is unlikely to dissuade them from further hikes in 1Q 2023. We and the markets still assign a high probability the Fed will hike rates by another 50-bps to 4.75-5.00% in 31 Jan/01 Feb 2023 FOMC.”