US Adds Just 199,000 Jobs In December, Unemployment Rate Falls To 3.9%

The SPDR S&P 500 ETF Trust SPY traded lower by 0.3% Friday morning after the Labor Department reported disappointing U.S. jobs market numbers from December.

The U.S. added 199,000 jobs in December, missing consensus economist estimates of 422,000 jobs. The U.S. unemployment rate fell to 3.9% from 4.2%. The labor participation rate was unchanged at 61.9%, its highest level since March 2020.

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Wage growth was 4.7%, down slightly from 4.8% in November.

The Labor Department also revised October’s total job growth higher by 102,000 jobs to 648,000 and November’s job growth higher by 39,000 jobs to 249,000. The combined revisions totaled 141,000 additional jobs.

The leisure and hospitality industry led the job creation in December, adding 53,000 positions. Unfortunately, employment in the leisure and hospitality industry is still down by 1.2 million jobs since February 2020.

Experts React: Anu Gaggar, Global Investment Strategist for Commonwealth Financial Network, said the jobs report was a disappointment and the full impact of the omicron variant of COVID-19 wasn’t even reflected in the December numbers.

“Overall, this print had mixed messaging – the payrolls growth number may look disappointing, but the underlying story is lack of availability of labor, which is manifesting itself in faster wage growth,” Gaggar said.

John Lynch, Chief Investment Officer for Comerica Wealth Management, said the disappointing report will likely not change the Federal Reserve’s planned path.

“Despite disappointment, sub-4.0% unemployment shows [a] tight labor market. Policymakers must maintain confidence of [the] markets,” Lynch said.

Charlie Ripley, Senior Investment Strategist for Allianz Investment Management, said the light labor market is only going to exacerbate the U.S. inflation problem.

“Overall, it would be surprising if the Fed is not contemplating a faster removal of policy accommodation at the January meeting since the inflation story doesn’t seem to be cooling anytime soon,” Ripley said.