U.S. December Employment Report: Some good news, at last

Key points: Employment gains accelerated sharply in December, increasing by 312K versus expectations of 184K. The increase was broad-based with some sector gains in construction and hospitality due to weather normalization. The near term trend is now back above 200K. Meanwhile, t he unemployment rate gained 0.2pts to 3.9% but accompanied by an increase in the participation rate. In short, today’s report was much stronger than expected . Yet, employment numbers are a lagging indicator of the economy. It is therefore too early to see any impact from the recent tightening in financial conditions or deterioration in confidence in the labor market. Therefore and despite to day’s number , the Fed will likely turn more cautious and pause its rate hike cycle in the near term .