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One of the most important monthly economic releases is the Employment Situation report from the U.S. Department of Labor. This is one of the top measurements of a healthy economy, although traders and investors tend to focus more on the monthly payrolls gains rather than the official unemployment report.

Friday’s economic report showed that the official unemployment rate was exactly as expected (Bloomberg and Wall Street Journal) at 4.1%. What was not anticipated was that the nonfarm payrolls and private sector payrolls came in much weaker than expected.

There is an explanation for why the report was weak on the jobs created, but it was still shy enough that some investors and economists wonder if it will tame endless interest rate hike expectations in 2018.

Nonfarm payrolls rose by just 148,000 and private sector (nongovernmental) payrolls rose by 146,000 in December. Bloomberg was calling for a consensus of 191,000 on nonfarm and 185,000 on private payrolls.

Where the discrepancy may have come into play was that retail lost 20,000 jobs. That may have been tied to some upcoming closures and would have taken place right before or right after the Christmas sales. And among the unemployed, the number of new entrants also decreased by 116,000 in December.

Another discrepancy was that November’s already large gains were revised higher and that takes away from some of the forward month’s strength. November was revised to 252,000 from a prior 228,000 in nonfarm payrolls and up to 239,000 from 221,000 in private payrolls.

One bright spot was in the manufacturing payrolls rising by 25,000 in December. Bloomberg had represented a forecast of just 15,000 for the month, and the November gain was 31,000.

The hourly workweek was flat at 34.5 hours.

The labor force participation rate remains quite low 62.7%. This matched November and was not a shock to the markets. Frankly, this number is going to have to improve if the positions open and unfilled will ever get filled.

As expected, average hourly earnings rose by 0.3% in December. While that sounds low on the monthly gain, the annual gain, versus December of 2016, showed a pop of 2.5%. That may not represent major wage inflation on the surface. Still, with all the bonuses being offered up and with a stronger jobs climate after tax reform it may lay the groundwork for further wage pressures ahead.

Another issue to consider inside the jobs number each month is the number of unemployed persons who are actively looking for a job. This figure rose marginally to 5.308 million in December. The pool of available workers (those seeking a job and those who are not seeking a job) was very similar at 11.884 million people.

Stocks were up the first three days of 2018, and Friday’s disappointment came with the silver lining that maybe this means a slightly less aggressive Federal Reserve for rate hikes in 2018. The S&P 500 was up over seven points at 2,731 and the Dow was up 65 points at 25,140 in mid-morning trading on Friday. Also worth noting was that the yield on the 10-year Treasury note was 2.46% mid-morning.