There is some great news in the U.S. Department of Labor’s December jobs report, but it also comes with a catch. The nonfarm payrolls rose by a whopping 312,000 jobs, but the unemployment rate rose to 3.9% from a prior 3.7% level. The Wall Street Journal had a consensus of 182,000 payrolls expected, along with a 3.6% unemployment rate.

Revisions also were made for the prior payrolls reports. November’s initial 155,000 payrolls were revised up to 176,000, and October’s payrolls initial 237,000 payrolls were revised up to 274,000.

Higher unemployment is supposed to be bad on the surface. The reason unemployment rose rather than stayed flat is that more people entered the workforce searching for jobs. And the much stronger payrolls report signals that businesses were still willing to hire.

One thing to consider here is that ADP had been so strong this week that it ratcheted up some expectations. And sadly, this jobs number is strong enough that Jerome Powell and the Federal Reserve still have some cover to keep raising interest rates despite slowing economic growth in most other releases.

The Bureau of Labor Statistics also reported that average hourly earnings rose by 11 cents to $27.48 per hour. That is a 0.4% gain from the prior month and continues the trend of higher wages. In fact, that’s a 3.2% annual gain and looked to be a post-recession high.

Another rare gain was seen in the average hourly week, up 0.1 hours to 34.5 hours.

Equity futures were strong after the report, with Dow, Nasdaq and S&P 500 futures all up over 1%.

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