The unemployment rate increased to 3.9 percent in December, from 3.7 percent in the previous month. The number of unemployed persons increased by 276,000 compared with the previous month to 6.3 million. A year earlier, the jobless rate was 4.1 percent, and the number of unemployed persons was 6.6 million, according to the Bureau of Labor Statistics. Nonbank mortgage companies employed 337,000 workers in November, a decrease of 5,000 jobs compared with October and 338,800 a year earlier.

December's numbers aside, 2018 was an outstanding year for employment, especially considering the length of the economic recovery the U.S. has experienced.

“The labor market ended the year on a stellar note, which should help soothe fears of a marked slowdown in the economy, said Doug Duncan, chief economist at Fannie Mae. “Robust December hiring plus upward revisions in the prior two months pushed the three-month average job gain to the strongest pace since September 2016, not too shabby for an expansion that is long in the tooth. While the focus may be on the impressive strength of job gains and the tick-up in annual wage growth to tie an expansion high, we believe the best news in today’s report is the rise in the labor force participation rate to the highest level in more than a year, which should please the [Federal Reserve].”

Given recent tightening of financial market conditions, including stock market volatility and widening credit spreads, amid well-anchored inflation around the Fed’s target, the positive jobs report gives the Fed more room to stick with the two rate hikes projected for this year in the, which remains Fannie’s expectation.

For housing, the jobs report signaled continued divergence of key demand and supply fundamentals. Whereas overall hiring and wage growth remain solid, the number of jobs in residential construction barely budged over the month, suggesting that the prolonged housing supply crunch will continue into the new year.