By Alfonso Esparza
The Department of Labor released the Non Farm Payroll report this morning and took the market by surprise. Estimates by economists polled by Reuters and Bloomberg were expecting a range between an increase of 150,000 to 250,000. The published number was 74,000, well below the estimates.
The bad weather hitting the US has been blamed for the slowdown in job creation. It comes at a bad time for the Federal Reserve as they started their tapering based on the previous months strong employment numbers.
December’s NFP is the lowest since 2011. The unemployment rate declined to 6.7 percent which is the lowest since 2008, but it has more to do with people leaving the workforce than a true recovery in employment.
The November employment numbers were revised upward by 38,000 jobs, so there is some expectation that December number was under reported. The reality will be that even with revision it will be below the market analysts expectations which also hints at the perceived versus the reality of the US economic recovery. This puts the Fed in a tough spot as the tapering program has been started. Bern Bernanke was wise to leave Yellen and Co. plenty of wiggle room on when to taper and even add to the stimulus package. They will need it.