US Adds 223K Jobs In December As Labor Market Pressures Fed To Keep Hiking Interest Rates

The SPDR S&P 500 ETF Trust SPY traded higher Friday morning after the Labor Department reported weak U.S. jobs market numbers from December.

What Happened: The U.S. added 223,000 jobs last month, above average economist estimates of 200,000 jobs.

New data from the Bureau of Labor Statistics showed the U.S. unemployment rate is at 3.5%, below economists' estimates of 3.7%. The labor participation was little changed at 62.3%, compared to the 63.4% pre-pandemic rate in February 2020.

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Wages were up 4.6% year-over-year and increased 0.2% from November. The leisure and hospitality industry led the job creation in December, adding 67,000 total positions.

The Labor Department also revised October's total job growth lower by 21,000 jobs to +263,000 and November's job growth lower by 7,000 jobs to +256,000.

Why It Matters: The Federal Reserve is paying close attention to the jobs market as the central bank continues its battle to bring inflation down to its 2% target range.

The Fed hiked interest rates by 50 basis points in December, bringing its target fed funds rate up to a range of 4.25% to 4.5%.

The Consumer Price Index (CPI) was up 7.1% in November, down from a 2022 peak of 9.1% in June. Following Friday's weak jobs report, the bond market is pricing in a 60.1% chance the Fed will opt for a smaller 0.25% interest rate hike at its upcoming meeting that concludes on Feb 1.

Market Action: S&P 500 futures were trading higher by less than 1% in Friday's premarket session.

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