Despite December’s strong headline job gains, which were well above forecasts, there are signs of weakness elsewhere in the labor sector. Home prices also continue to appreciate on an annual basis. Read on for these top stories and more.

Big Upside Jobs Surprise
Private Sector Job Growth Hits 4-Month Low
Increase in November’s Job Openings Not Whole Story
Holidays Likely Impacted Unemployment Filings
Uptick in Annual Home Appreciation Forecast

Big Upside Jobs Surprise

The Bureau of Labor Statistics (BLS) reported that there were 256,000 jobs created in December, which was well above estimates of 160,000. Revisions to October and November shaved 8,000 jobs from those months combined. The unemployment rate fell from 4.2% to 4.1%.
**What’s the bottom line?** December’s headline job growth figure will be subject to revision in the next two reports, so we’ll have to see if the data remains as strong as it initially seemed. However, this report had a different tone than the softer labor sector data we’ve seen in recent months, as it showed strength on multiple fronts. This included an increase in the number of both full-time and part-time workers after both declined in November.
One notable downside to mention is the average duration of unemployment rising to 23.7 weeks. This is the highest amount since April 2022 and coincides with the elevated trend we’ve seen in weekly Continuing Jobless Claims.

Private Sector Job Growth Hits 4-Month Low

ADP’s Employment Report showed that private sector job growth was weaker than economists had forecasted in December, as employers added 122,000 new jobs versus the 140,000 that were expected. This marked the lowest number of new jobs added in the private sector since August. The job growth that was previously reported for November (+146,000) was unrevised.
**What’s the bottom line?** The bulk of hiring came from the services sector, which added 112,000 jobs, and from large businesses with 500+ employees. Small businesses with less than 50 employees added 5,000 jobs. Though this was only a modest gain, it was an improvement over the losses that had been reported for small businesses in some recent prior months.
Wage growth also moderated for both job-changers (+7.1% from +7.2%) and job-stayers (+4.6% from +4.8%) after an unexpected rise in November. Stayers saw the slowest pace of gains since July 2021.

Increase in November’s Job Openings Not Whole Story

The latest Job Openings and Labor Turnover Survey (JOLTS) showed that job openings rose from an upwardly revised 7.839 million in October to 8.098 million in November, which was above what economists had forecasted. However, the hiring rate fell to 3.3% while the quit rate also fell to 1.9%, putting both at over 10-year lows not counting COVID.

What’s the bottom line? While the Fed watches this report to monitor slack in the labor market, there are flaws in the data. The increase in working from home means job listings are being posted in multiple states more frequently. As a result, they’re being overcounted in the JOLTS total so the report may be weaker than the headlines suggest.

In addition, a low quit rate is also a sign of weakness because it suggests people are seeing fewer opportunities to pursue. This is also reflected in the job openings to unemployment ratio, which compares the number of job openings to the number of unemployed persons. That ratio now stands at 1.1, a big decline from the peak above 2 in 2022 and shows a labor market that is cooling.

Holidays Likely Impacted Unemployment Filings

The number of people filing new unemployment claims fell by 10,000 in the latest week, with 201,000 Initial Jobless Claims reported. Continuing Claims rose by 33,000, as 1.867 million people are still receiving benefits after filing their initial claim.

What’s the bottom line? People often put off filing for unemployment if they’re traveling or busy during the holidays. This could have skewed both sets of data as Initial Jobless Claims measured the week with New Year’s Eve/Day while Continuing Claims measured the previous week that included Christmas.

However, the slowdown in hiring we’ve seen has been persistent, with Continuing Claims now topping 1.8 million for 31 consecutive weeks. This also suggests people are experiencing longer bouts of unemployment as new job opportunities have become harder to find.

Uptick in Annual Home Appreciation Forecast

CoreLogic’s Home Price Index showed that home prices nationwide were essentially flat in November, rising 0.06% from October. Prices were also 3.4% higher when compared to November of last year.

What’s the bottom line? CoreLogic forecasts that home prices will fall 0.2% in December and rise 3.8% in the year going forward, up significantly from the 2.4% growth forecasted in the previous report. CoreLogic is usually conservative in their forecasts, so the large revision upwards for annual price growth is noteworthy.

This latest appreciation data from CoreLogic and other major home price indexes like Case-Shiller and the Federal Housing Finance Agency shows that homeownership continues to provide opportunities for building wealth through real estate

What to Look for This Week

Inflation data will make headlines, starting Tuesday with the Producer Price Index for December. The Fed will be closely watching when the Consumer Price Index follows on Wednesday. Thursday brings several important reports, including an update on December’s Retail Sales, the latest Jobless Claims and homebuilder confidence for this month. More housing news follows on Friday with December’s Housing Starts and Building Permits data.

Technical Picture

After Friday’s strong Jobs Report, Mortgage Bonds broke beneath support at 99.87. They ended last week testing the next floor of support at the 99.65 Fibonacci level. The 10-year broke above an important resistance level at 4.735% on Friday, with the next ceiling now at 5%.

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