Chart #1 —
Latest U.S. macroeconomic statistics point to a soft landing for the economy
Friday's labor market report was the most anticipated information of the week. Nonfarm payrolls rose by 223,000 in December, the smallest increase in two years (while still above consensus expectations). The separate household survey showed that unemployment fell to its lowest level since the pandemic, at 3.5%. But the statistic that reassured the markets was average hourly earnings, which rose "only" 0.3% from the previous month, slightly less than expected. November's increase was revised downward. It would seem that wage growth is slowing down, a development that should allow the Federal Reserve to soon put an end to the monetary tightening cycle. This should make the financial markets happy.
On Friday, we also learned that the Institute for Supply Management (ISM) service sector activity index fell to 49.6, well below consensus and into contractionary territory (below 50) for the first time since May 2020 as new orders slowed sharply.
These statistics point to a soft landing for the U.S. economy.
Change in US hourly wages over 12 months
Source: U.S. Department of Labor