January Jobs Report

In January 200K jobs were created

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In January 200K jobs were created

The U.S. jobs report revealed a solid 200k January payroll gain, following annual revisions that raised the level of December payrolls by 230k, which both exceeded market assumptions, and hourly earnings rose 0.3% to leave a cycle-high 2.9% y/y climb.

Yet, hours-worked posted a January drop-back from upwardly-revised prior levels thanks to a drop in the workweek to 34.3 hours with weakness skewed toward the goods sector that was maybe weather-induced.

Note that those not at work due to weather popped to 496k in January, versus a 331k 10-year average for the month.

For the goods sector, jobs rose by a solid 57k as expected, with gains of 15k for factories, 36k for construction, and 6k for mining, but hours-worked for the goods sector fell 0.5%, with declines of 0.3% for factories, 0.5% for construction, and 0.2% for mining.

Analysts saw big gains of 409k for civilian jobs and 518k for the labor force that left a fourth consecutive 62.7% participation rate.

For annual revisions, analysts saw larger than expected boosts of 230k for December payrolls, 247k for private payrolls, and a 17k downward bump for government.

For the benchmark month last March, analysts saw a 146K SA upward revision and a 138k NSA hike, versus guidance of a smaller 95k NSA boost.

The first question is whether the U.S. economy can maintain a robust pace of monthly job creation this far into the economic cycle. Already, the three- and six-month moving averages for job creation have significantly exceeded the pace that would be expected after impressive prior gains and a steep decline in the unemployment rate.

By contrast, wage growth has continued to run below expectations. In turn, this has limited the household income gains that would normally accrue with the labor market achievements. This may also help to explain why the labor participation rate has not materially edged up from a level that remains uncomfortably near multi-decade lows.


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