Economists find the released report by the labor department a bit disappointing. Although it seems like 199,000 jobs are getting back to work, it is slightly lower compared to November payrolls. The report also added other figures, including the unemployment rate, which was a bit of a pleasant surprise for investors. The unemployment rate decreased to a low of 3.9%.
The report addresses four sections of the non-farm payrolls, which are lower than November and less than the expected hiring jobs in December. 199, 000 jobs are coming back while it was expected to at least increase to 45, 000. According to these figures, the hiring process is getting slow and the labor market is still struggling. However, there is some good news: the unemployment rate fell and outperformed the November unemployment rate.
The average hourly earnings month over month increased by 0.6%, a bit higher compared to November’s hourly earnings, which were also 0.4%. The report also noted that the average hourly earnings rose by 4.7% year over year, surpassing the expected increase of 4.2%.
In early December, experts and economists predicted that hiring would increase by at least 410,000. But the report was a failure for them, and they described it as a disappointment. With all, that’s happening today in the labor market and prices increasing, investors were hoping to see an improvement in payrolls. Official speakers of the government stated that the government has some work to do and is dealing with the present issues, by which they mean the workforce shortage and the inflation surge. All that had to be dealt with in the times of Omicron, which seems to be the reason why people are leaving the workforce.
The Nasdaq and the S & P 500 declined.
The Dow and S & P 500 fell following the recent release that we previously discussed. Investors are worried about the wages that will come after and cut off earnings and expand losses. On top of that, this is actually one of the top concerns that the U.S. and global institutions must find a solution for. Investors are increasingly expecting payroll rates to rise and create at least 4 million new jobs. This will allow businesses to grow and maximize their profits.
What makes it worse is that the Omicron variant is recording new high cases every day. Economists are saying that they can’t assess its actual damage in the present. Using their words about the report, things might be lost word, and it’s too early to have a final assessment of the impact of labor shortages on the economy. Now investors are turning their eyes to federal policy, which includes increasing interest rates three times.
The shortage in the labor market is slowing businesses down, and that may hurt the economy. As for the stock market, it was facing a long and unpredictable three months starting in October. The stock market isn’t in its best days, even though there are major names that are showing massive growth in the market. But in general, some names are struggling due to the slow production process as a result of labor shortages.
Despite the negative news, the hiring process might have gotten slow in recent months, but in total, the U.S. government has managed to add 6.4 million jobs in 2021. That should bring some relief to the economy, even if it’s for the short term. The U.S. states that by March, the unemployment rate will decline and payrolls will rise. Things will tighten before long while Americans are without a job and some are switching jobs to make a living.