Look out! US payrolls are comin’ in hot.

The US economy added 256,000 jobs last month, the BLS said Friday. That was almost 100,000 ahead of consensus and very nearly matched the highest estimate from the 75 economists who ventured a guess.

On the surface, at least, the update had the potential to cement the Fed’s hawkish turn and may push expectations for the next rate cut (assuming there is one; hold that thought) out to June.

December’s headline counted as the briskest since March. On net, revisions reduced payrolls by 8,000 for the prior two months. The second revision added 7,000 to October’s tally, while November’s readout was revised down by 15,000 to reflect a 212,000 advance.

Gains in December were led by health care, government, retail (which bounced back after a weak showing in November) and leisure and hospitality. Private payrolls rose 223,000. That blew away even the highest estimate. Consensus there was just 140,000.

The release incorporated an updated household survey, revised with new seasonal adjustment factors. That’s an annual exercise. The January jobs report (due February 7) will see NFP, hours and earnings data from the establishment survey revised in the final go at the annual benchmark process.

The unemployment rate, which very nearly rounded up to a cycle high in November, ticked lower, to 4.1% (4.086% unrounded) for December. The participation rate was unchanged at 62.5%.

Happily for a Fed concerned about rekindled price pressures in the services sector, average hourly earnings rose “just” 0.3%, in line with estimates, and 3.9% YoY, a tenth cooler than the expected 12-month pace. That might take some of the edge off an otherwise blistering release, although really, that YoY pace needs to be closer to 3.5% to be consistent with 2% consumer price growth.

The (revised) household survey bounced back from two straight large declines to show a 478,000 gain, the largest month-to-month increase since November of 2023, but the discrepancy remains rather pronounced.

The figure above incorporates the revisions to the household survey. Again: The disparity between the two tallies is very wide. That’s a sort of Linus security blanket for bears, even as no one trades the household tally.

Bottom line: December’s jobs report was quite strong. It’ll reinforce the Fed’s hawkish bias, and won’t do anything to dissuade the bond vigilantes, who are hard at work in the new year pushing long-end yields higher in the US (not to mention in the UK).

Earlier this week, Michelle Bowman, ardent (arch?) hawk, said that although she supported last month’s cut, that move should be “the final step in the policy recalibration phase.”