December unemployment rate of 4.6%

The unemployment rate rose to 4.6% – definitely on the low end of my expected distribution. However, the participation rate rose to an all time high and employment rose 0.9%. This was very different to the strong (seasonally adjusted) fall in the quarterly employment survey.

This result indicates a stronger labour market than anyone has been picking. However, don’t forget to look at hours worked. Hours worked is the true “labour input” and that has fallen 2.8% on a year ago – the sharpest fall since the recession of the early 90’s. With hours falling like that I can’t see unemployment staying low for long …

What do you guys think?

  • I was really surprised to see the uptick in participation rates.

    If I thought Bollard were rational, I’d go and short some of the higher-range OCR picks at iPredict. Instead, I’ll go buy some of the inflation stocks!

  • I already had some 100’s shorted, and I had purchased 25s and 50s – but I also had a sell order on them thats been hit (as I was more trading on volatility 😛 ).

    I’m surprised at the low price of 75s given that it is the average economist pick – although I guess that might be the factor working against it 😛