Talk about a happy surprise. Not only were projections dismal, but the conventional wisdom had shifted to it being even worse. However, it turns out that pessimists were not correct as the January report beat expectations and then some, according to the Bureau of Labor Statistics…(BLS)
- Total nonfarm payroll employment rose by 467,000 in January and the unemployment rate was little changed at 4.0%.
- Economists had projected a smaller increase of 150,000.
NOTE: Wednesday’s ADP report showed 300k jobs lost in January so feelings were even more pessimistic than just a small number.
The biggest growth continues to be in leisure & hospitality with 151k jobs created in January…
- Professional services saw the second biggest jump with 86,000 new jobs followed by retail (+61,000) and transportation & warehousing (+54,000).
Wage growth did continue into the new year, but it’s still not keeping up with inflation…
- AVERAGE HOURLY EARNINGS were up 5.6% year-over-year to $31.63.
- AVERAGE WEEKLY EARNINGS were up 4.1% year-over-year to $1,091.24.
- INFLATION continues to outpace wages with the Personal Consumption Index at 5.8% in December 2021.
Back to the good news. December & November job reports saw a YUGE revision. Job growth was actually over one million compared to the 400k that was previously reported.
- NOTE: The last three month revisions have added 1.5 million jobs to the economy.
After the report, all attention seemed to shift to the impact this is going to have on the Fed’s rate decision in March…
- Conor Sen from Bloomberg tweeted “The path to get [a 50 bps rate hike] is a hot CPI report -> Fedspeak signaling that 50bps is on the table. Markets have to try to price that scenario.”
- Neil Irwin from Axios tweeted: “The jobs report is a big ole green light for Fed tightening, to say the least.”