Employment grew solidly last month and the jobless rate dropped to a near three-year low of 8.5 percent, offering the strongest evidence yet of an acceleration in economic activity.
ALAN RUSKIN, HEAD OF G10 CURRENCY STRATEGY, DEUTSCHE BANK, NEW YORK
The data will add to confidence that the U.S. can decouple from (euro zone) travails as long as there is no direct impact on U.S. financials that leads to a significant retreat in credit availability. Interesting to see an orthodox reaction with the dollar gaining against the euro on strong data. The euro is again proving to be the natural short, and immediate reaction has been to reinforce some of the most popular trades of the year, including long LatAm, short euro. How much (markets) run on this will partly be determined by whether the data eventually helps push S&P through major resistance in 1295-1300 zone on a multi-week basis.
STEPHEN STANLEY, CHIEF ECONOMIST, PIERPONT SECURITIES, STAMFORD, CONNECTICUT
All the key indicators are moving in the right direction. One of the things has been the drop in the unemployment rate the past couple of months due partly to a decline in the labor force. Some people have viewed it as a negative, but household employment has been rising rapidly.
The jobless rate is taking an unusual importance. The Fed has been keeping an eye on this. This weakens the case for QE3. The unemployment rate will also play a pretty big role in upcoming presidential election.
The Fed is very dovish right now. The threshold for them to move rates is very high. After the release of the recent minutes, the Fed has expressed that they are not that sensitive to these pickups in the economy.
We were looking pretty strong last year, but then you had the storms, tsunami and rise in oil prices. Europe is still a black cloud on the horizon but if they are able to muddle through, which I think they will, we are not going to be hit with the perfect storm like last year.
ANDREW WILKINSON, CHIEF ECONOMIC STRATEGIST AT MILLER TABAK & CO IN NEW YORK
It was a healthy report, with greater employment and lower unemployment. There were fewer cracks in it than previous reports. Overall it is pretty strong. Market-wise, we're not seeing much of a response because there's a question of whether U.S. strength is sufficient to drag the focus of investors out of the shadow of Europe. Personally I think so, but at this point, not enough people are convinced of that, or they're convinced the euro zone will implode. It may take some time until this decoupling takes center stage.
DAVID RESLER, CHIEF ECONOMIST, NOMURA SECURITIES, NEW YORK
There seems to be a seasonal bias in reported data during the period from roughly November through March, and that could be exaggerating the improvement in various metrics of the labor market.
Nonetheless, I don't want to dismiss this as any kind of statistical aberration. I think we're seeing clear signs both in the unemployment rate and the hiring that the job market has improved. Consumers are well aware of that improvement.
We've seen consumer confidence measures pick up strongly in the last few months, and consumers are well aware that the job picture has brightened a bit. That's obviously good news for the economy.
We don't want to lose sight of the fact that there is a very long road to hoe here before we're back to anything approaching a healthy and normal job market.
DAVID WATT, SENIOR CURRENCY STRATEGIST, RBC CAPITAL, TORONTO
The U.S. jobs report gave credibility to the ADP survey, which we tend to ignore. It's far from signs of a trend but it's a fairly healthy number. This highlights that the U.S. economy is on its way to recovery even as strains in Europe persist. The dollar has gained on this number, breaking away from the risk-on/risk-off dynamic. At some point, we were bound to break away from that mode anyway, but we have to see continued signs of stability in the U.S. economy for positive U.S. data to be continuously supportive of the U.S. dollar.
ROBERT SINCHE, GLOBAL HEAD OF CURRENCY STRATEGY, RBS, STAMFORD, CONNECTICUT
It's a pretty solid report. This is the fifth month of the year where private payrolls were up 200,000. That's a good sign. The only caveat is that construction employment was up 17,000, and that won't get repeated any time soon. What's interesting is we'd gone a long time where good data was, paradoxically, not good for the dollar. It looks like we may be turning the corner on that. We are at the point where the divergence in U.S. growth and the rest of the world is becoming noticeable. Now, we're not getting a big pass-through to two-year rates, and five-year rates aren't budging much on this, either. So I doubt the dollar has a lot of legs here. But I do think people are looking at everything going on in Europe and the cyclical divergence between U.S. and euro zone growth.
TODD SCHOENBERGER, MANAGING DIRECTOR AT LANDCOLT TRADING IN WILMINGTON, DELAWARE
Today's figure should not come as a great surprise. The recent macro headlines provided the necessary clues for economists to predict a decent print. The wildcard is January as retailers trim seasonal staff. An upside surprise for this month will validate the argument that an economic recovery is, indeed, talking place.
CHRISTOPHER LOW, CHIEF ECONOMIST, FTN FINANCIAL, NEW YORK
It's stronger than expected. There were some downward revisions but even that's not necessarily such a bad thing because the trajectory of job growth over the year is even more upward than it looked before. The revisions were in the first half of the year.
As much as we see 200,000 job gains and it's been a long time since we've seen that, I think the most impressive thing is the drop in the unemployment rate. Eight and a half percent in the unemployment rate was the low end of expectations for the rate at the end of 2012--and we're there now.
Job growth in the household survey is even stronger than in the payrolls survey, so the drop in unemployment isn't just because people are dropping out of the labor force.
GREG ANDERSON, SENIOR CURRENCY STRATEGIST, CITIGROUP, NEW YORK
It's a solid report. The market was looking for it and got it. I'd say the drop in the unemployment rate is good news for Obama. The uptick in hourly earnings is good news for everybody. The decline in the unemployment rate may be exaggerated a bit in terms of how the labor force is computed, but this still has to be interpreted as a solid report. We've seen euro-dollar fall a bit but I would anticipate that we get a rally in risk and emerging market currencies as they day goes on.
SEAN INCREMONA, ECONOMIST, 4CAST LTD, NEW YORK
Overall it looks pretty constructive. Private sector job gains were up there and we also saw an encouraging increase in the work week and earnings, which does suggest some broad based progress. It's unsure if we can see some more momentum but it does seem like things are holding up.
FRANK DAVIS, DIRECTOR OF SALES AND TRADING AT LEK SECURITIES IN NEW YORK
At first glace, looks like the trend is going in the right direction. The number might be suspect, but if we get a second month of hiring of like this, that will suggest a stronger trend. But there's still a long way to go until the labor market is strong, and there's still a lot that could happen with Europe.
VIMOMBI NSHOM, ECONOMIST, IFR ECONOMICS, A UNIT OF THOMSON REUTERS
Even though economists thought November's improvement in the unemployment rate was unique and driven by the wrong forces, December's job report shows that 200,000 additional jobs were added to the economy over the month, while the unemployment rate fell, yet again, to 8.5%, thanks to job creation forces as opposed to discouraged Americans.
(Americas Economics and Markets Desk)