US Payrolls Disappoint Forecasts

The latest report from the US Bureau of Labor Statistics showed job growth tapering during the month of December, falling to 156,000 jobs added compared to the upwardly revised 204,000 gained in November.

The unemployment rate rose modestly as a result, increasing to 4.70% from 4.60% prior as the number of workers not in the labor force rose to a record 95,102,000 individuals.  However, despite the weakness on a headline basis, the silver lining was the best wage growth in years.

According to the data, average hourly wages grew by 0.40% in December and 2.90% over the last twelve months, the fastest pace of incline since 2009 in a sign that a tightening labor market is leading to wage growth.  In the meantime, US equity futures remain just shy of intraday record highs, with Nasdaq futures remaining firmly above 5000.

Canadian labor force participation received a dose of positivity in the latest reading with employment rising by 54,000 jobs during December, with full time jobs accounting for the vast majority of the gains.

The rise in the unemployment rate to 6.90% was widely forecast and anticipated, accounting for the relatively limited reaction to the report.  Nevertheless, higher oil prices are showing a positive impact on the Canadian dollar as stabilization in crude prices helps buoy the local currency.

In another positive sign for the Canadian economy as it slowly recovers, the Ivey PMI rose to 60.8 from 56.8 during the previous reading, reaching the highest point since May and pointing to increased optimism in the outlook.  After a significantly lose streak over the last two weeks, the USDCAD pair is back on the retreat following a modest rebound on Friday.