© Reuters. Markets continue to price in March Fed rate hike after employment data© Reuters. Markets continue to price in March Fed rate hike after employment data

Investing.com – Despite the fact that Friday’s release of the monthly employment report showed fewer jobs were created in December than forecast, the data left the Federal Reserve in full gear to move ahead with their “gradual” tightening cycle and market bets remained on March for the next interest rate hike.

(NFP) rose by just 148,000 posts in December, missing the consensus forecast for 190,000 jobs and a far cry from the ADP data for the same month that said job creation in the last month of 2017 had hit 250,000.

Despite the “worst-than-forecast” figures, the U.S. economy only needs to create 75,000 to 100,000 jobs per month to keep up with growth in the working-age population and December’s number comes on the back of more than 200,000 jobs created in the prior two months.

Inevitably, jobs growth will likely slow throughout 2018 as the labor market itself begins to tighten even further.

Add to that the fact that the remained an at extremely low 4.1%, while the held stable at 62.7% and the report far from suggests that the U.S. labor market is on its last legs.

“With the economy growing strongly (we expect 3% GDP growth this year) and business sentiment at such high levels, we expect the U.S. to continue creating jobs in significant numbers,” ING analysts commented after the release.

Wage inflation also ticked higher with rising by 0.3% as expected, ticking up from a prior 0.1%. Year-on-year, wages rose by 2.5%, also in line with forecasts.

With employment unarguably “solid” stateside, investors would do well to keep an eye on wage inflation which has been lagging considering the improving labor market. Risk in the jobs report no longer has to do with the typical headline numbers of job creation and unemployment rate.

If salaries begin to increase, that would be expected to pass through to prices, spurring inflation higher. It would be that fact which could force the Federal Reserve to consider upping the pace of its currently “gradual” tightening cycle.

Fed policymakers said in December that they believe they will hike three times this year. If inflation were to speed up, the U.S. central bank would undoubtedly have to shift gears.

Despite an in the dollar against major rivals, the greenback managed to recover is currently at levels seen before the employment report was released. U.S. stock markets seem unfazed with .

In short, the weaker-than-expected job creation did little to shift positions. According to Investing.com’s , markets still discount the Fed to hike rates by another 25 basis points in March and remain somewhat skeptical of the central bank’s projection that it will move three times in 2018 with odds still slightly lower than the 50% threshold.

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