The December non-farm payrolls report came in at 145,000 jobs added which was just below the consensus of 160,000. The unemployment rate was unchanged at 3.5%, and average hourly earnings came in at 2.9% over the last 12 months which missed the consensus estimate of 3.1%. Overall, this report is consistent with an economy growing around 2% that is decelerating.

No Q4 Pickup

While this narrative is perfectly consistent with recent data over the past six months, it's not consistent with price action and behavior of equities over the last three months. The employment report also showed that hiring was flat and slightly negative in the manufacturing and industrial sectors, while employment in housing, retail, and health care climbed higher.

Manufacturing lost 12,000 jobs in December with some impact due to Boeing's (BA  ) issues down the supply chain. Another notable miss is a surprise drop in professional and business services with 10,000 jobs lost. This follows nearly a decade of job growth in this area so bears watching to see if this is a random reading or the start of a trend. However, it is one more data point for bears.

Bullish for Asset Prices

Overall, the report is unlikely to meaningfully impact Federal Reserve policy in either direction and is bullish for stocks. Futures in interest rates were unaffected and continue to show one hike until the end of 2021. The headline figure and wage growth numbers signal an economy that's expanding but not at a fast enough pace to ignite inflation. This circumstance is quite supportive of equity prices - an expanding economy coupled with dovish monetary policy.

This was reflected in equities moving higher, and interest rates moving lower immediately upon the report's release. The report is another data point which debunks any imminent recession prediction, and the wage growth figures also don't

The broad economy remains resilient to the trade war and slowdown in manufacturing. It reflects that manufacturing is increasingly a smaller share of the economy and also that other components of the economy like retail spending and housing in addition to the labor market remain solid.