The stock market likes the U.S. jobs numbers, which came in far higher than expected. The consensus was for a gain of about 150,000 jobs in December -- the actual number was 200,000. The unemployment rate fell to 8.5 per cent.
Dow futures, which had been up just 27 points before the numbers came out, rose 64 points, or 0.5 per cent, to 12,395.
S&P 500 futures, which had been up just 2.9 points before the data, rose 7.3 points, or 0.6 per cent, to 1,280.40.
At the same time, the unemployment rate retreated to 8.5 per cent from 8.6 per cent in November. Economists had been expecting a slight uptick, to 8.7 per cent.
How good is this news? While expectations were relatively tame, Thursday's strong ADP report on private sector employment had lifted some hopes that forecasts would be beaten, so the strong employment gains might have been baked into markets, at least a little.
Here's a quick look at what economists are saying about the U.S. jobs numbers,
"The job gains were broadly distributed, and the total revision to the prior two months was negligible. Goods-producing jobs looked better than in prior months, a positive cyclical indicator. Wages are still tame, rising 0.2 per cent and average hours were unchanged. Overall, while expectations on the payrolls count had likely moved up to something close to these numbers, the even lower jobless rate was better than anticipated. Negative for fixed income, supportive for equities and 'risk-on' currencies."
- Avery Shenfeld, chief economist, CIBC World Markets
"Thursday's ADP had warned of a strong December non-farm payrolls report, and this is exactly what we got. The acceleration of private sector hiring is particularly uplifting. With December's increase, fourth-quarter aggregate hours worked were up 3 per cent annualized, an acceleration from the third quarter's roughly flat hours. So, unless we got a steep and sudden drop in productivity (highly unlikely given the large capital expenditures), fourth-quarter U.S. GDP growth should be quite strong.
"The strong U.S. results raise questions about the sustainability of Canada's weak jobs performance in the fourth quarter last year. While we're not anticipating a stellar jobs market in Canada in 2012 (employment growth will be below last year's), we should nonetheless see an improvement from Q4's disappointing numbers, in line with the U.S. ascent."
- Krishen Rangasamy, senior economist, National Bank
"This report stands up to scrutiny on the details. If there is a fly in the ointment, it lies in the fact that the pace of job growth out of this cycle remains fairly modest as nonfarm payroll gains have had several slightly above-200,000 prints this year but have yet to break through toward a more aggressive pace of gains.
"The unemployment rate's decline occurred partly through job growth but also because the labour force contracted. I wouldn't take the 8.5 per cent unemployment rate as a great sign, however, in that it is entirely likely that should job growth prove resilient, discouraged workers are likely to return to markets seeking employment and thereby put upward pressure on the size of the labour force and the unemployment rate. This would be a typical cyclical response in which improvements to the unemployment rate usually lag jobs."
- Derek Holt, Scotia Capital
"One slightly sour note was a slim 8,000 decline in temporary employment. However, even this could be perhaps explained away by increasing willingness of employers to add to permanent payrolls. On the flip side, the overall gain was flattered by a 42,000 increase in couriers and messengers --- similar to the prior year, which was then reversed in January, and we could see a repeat this time too.
"The sturdy jobs report adds to the growing list of indications that the U.S. economy gathered momentum as 2011 came to a close, in stark contrast to almost the entire rest of the world. The late-year pick-up in jobs, and now even earnings, should help support at least moderate consumer spending growth in early 2012. The key now is for this strength in employment to be sustained beyond a few months --- after all, the job market also saw a nice bounce early in 2011, only to be cut short by a slew of shocks."
- Douglas Porter, deputy chief economist, BMO Capital Markets