The unemployment rate edged down from 5.7 percent in November (revised from an earlier reported 5.8 percent) to 5.6 percent in December. However, the main reason was that 273,000 workers reportedly left the labor force. The employment-to-population ratio was unchanged at 59.2 percent, roughly 4.0 percentage points below the pre-recession level.

Most of the other news in the household survey was positive. The number of people involuntarily working part-time fell by 60,000 and is now almost 1 million below its year ago level. The number of people who chose to work part-time also fell from the November level, but it is still 1.1 million higher than its year-ago level. This is likely due to the ACA, which has allowed workers to get health care insurance outside of employment.

The story from the establishment survey was overwhelmingly positive. There were 252,000 jobs created in December. With upward revisions to the prior two months' data, this brings the three month average to 289,000. It is likely that some of the jobs -- for example the 48,000 reported in construction -- were the result of better than usual weather for the month, but there is no doubt that the economy is now adding jobs at a healthy pace.

The story on wages is more mixed. The jump in wages reported in November was widely touted. However, it was almost completely reversed this month, with the December data showing a 5 cent drop from a downwardly revised November figure; the average hourly wage is just 1 cent higher than it was in October. Clearly the labor market will have to get considerably tighter before we see substantial wage growth.