What's going on?

Data out on Friday showed the US added far fewer jobs than expected last month, in what�s proving to be a pattern the country just can�t break out of.

What does this mean?

The American job market looked much the same last month as it did for most of 2021: the threat of Covid, lack of childcare, and reserves of post-lockdown savings all dissuaded would-be employees from dusting off their interview jackets. So it follows that the US added just under 200,000 jobs in December � less than half what economists were expecting. But if you�re looking for a bright side, the unemployment rate did fall to 3.9% � the lowest since before the pandemic and not far off the 50-year low of 3.5% from February 2020 (tweet this).

Why should I care?

For markets: Wages come, wages go.
The shortage of workers means employers haven�t been able to rest on their laurels. In fact, they�ve probably had to sell their laurels to afford to pay higher salaries, which have driven average hourly earnings up by 4.7% compared to the same time the year before. That�s another expense companies need like a hole in the head, and it could force them to raise their own prices to protect their profits. Last week�s reveal, then, that the Federal Reserve (the Fed) might raise interest rates sooner than expected to keep rising prices in check could be a smart � and necessary � move.

The bigger picture: The ECB�s in denial.
The European Central Bank (ECB) might want to think about following the Fed�s lead: data out on Friday showed consumer prices in Europe climbed by a higher-than-expected 5% last month versus the same time the year before � the biggest jump since the euro was introduced. The ECB has been more dogged than most in its belief that high inflation is temporary, but traders are now betting it�ll have to change its stance and raise interest rates by October.