Job growth is shifting into a lower gear, but pay increases in December came at the best pace since 2009 — a sign of more wage gains — and inflation to come.
The economy added 156,000 jobs, fewer than the expected 178,000, but wages grew by 2.9 percent year over year. The unemployment rate rose slightly to 4.7 percent. November payrolls were revised higher to 204,000, and October's reduced to 135,000, for a net increase of 19,000 jobs in those two months.
"We're not going to be able to do much more than the 150,000. We just don't have the people. Job growth always slows when you reach full employment," said James Paulsen, chief investment strategist at Wells Capital Management.
"If you take job creation, plus wage creation, the combo package, we just had a job number equivalent to 250,000. It just didn't come in new jobs. It came in wages."
"It's a solid report," he added, "and it's the new way we're headed in this recovery — more nominal wage gains than raw job creation. There just aren't enough bodies."