December Jobs Report Commentary from MBA's Mike Fratantoni

The following is MBA SVP and Chief Economist Mike Fratantoni’s reaction to this morning’s U.S. Bureau of Labor Statistics report on employment conditions in December.  

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“The December jobs report showed only a gradual deceleration in the pace of job growth and a small decline in the unemployment rate. The one sign of softness was a reduction in wage growth, now at 4.6% on a year-over-year basis. Although there are an increasing number of high-profile layoffs, particularly in the technology sector and also in the mortgage industry, hiring in other sectors of the economy are more than offsetting these on net. Additionally, November data showed that there were still more than 10 million job openings in the economy. The consistent slowing in the pace of wage growth may reflect employer caution as other data clearly signal a weaker economy in 2023.

“Slower wage growth should also be reflected in further reductions in the rate of inflation, as businesses will have less cause to push prices up to pay for higher wages. Ultimately, this should result in inflation dropping back to the Federal Reserve’s 2% target.

“Today’s report will not lead the Fed to quickly change course with respect to the path of interest rates, and we expect a 25-basis-point hike at the next meeting. Mortgage rates are off their highs from last year and we expect them to trend down over the course of 2023.”