I don't think it really suggests there is any inflation developing -- a 0.3 percent rise in wages is pretty manageable. But it's a pretty positive report; it suggests that the overall jobs market is pretty healthy.
I think it's totally a blip. I expect to see pretty healthy growth in 2006. We'll be back to 4 percent next quarter.
Most of the really alarming data has related to the manufacturing sector, which clearly is slumping. But since it only accounts for about 15 percent of total employment, it isn't dragging everything else down.
If unemployment sticks at about 6.0 percent and starts coming down, the Fed will probably feel it has to start tightening fairly soon.
If even 5 to 6 percent GDP growth isn't enough to get any net hiring, then the risks rise that the stimulus from the tax cuts and defense spending could produce a one-time boost that will fizzle out next year.
I'd say there's only a 25 percent chance of a rate hike in June even. Even with another strong jobs report Friday, they'll want to have something that looks more definitely like a trend.