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Non-farm Payrolls In-line With Expectations

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Today’s non-farm payroll report from the U.S. Bureau of Labor Statistics (BLS) came in roughly in-line with expectations — and even notably better on the Unemployment Rate: 6.3% versus 6.7% consensus — at 49K new jobs having been created in January. However, big downward revisions from the past two months throw a wet blanket on the labor market over the past three months, which is now down about 100K jobs from where we thought we would be.

This 49K headline is the lowest positive monthly read since prior to the pandemic. Even worse, December’s already bad initial read fell 87K to -227K new jobs created that month, and November saw a slide from -264K to -336K in this latest revision. That amounts to 159K fewer jobs created in the previous two months than originally understood. Average Hourly Earnings came in at +0.2%, lower than expected and down from the +0.8% posted a month ago.

Among the best jobs-producing industries last month was Professional/Business Services, at +97K. However, one caveat here is that Temporary Employment took up the lion’s share of these gains, +81K. In the last (pandemic-tainted) year, Professional/Business Services have lost 825K jobs overall. This is illustrative of the labor force hole we continue to dig out of. In all, we still have 9.7 million fewer jobs than we had a year ago. Addressing the lower Unemployment Rate, 4.3 million people have now left the work force, no longer counted.

Leisure and Hospitality lost 61K positions last month, which may have been expected. Retail dropped 38K jobs, which, following holiday season, may have been expected as well. What likely no one saw coming was the 30K drop in Healthcare jobs last month, considering the critical need for healthcare workers as the fight to bring the pandemic to an end continues. Healthcare positions had been one of the most consistent job growers, going back well before the pandemic.

Labor Force Participation reached 61.4%, down marginally but also indicative of the lack of motivated job-seekers. With small businesses going dormant upon an eight-month lack of government relief to slog through pandemic conditions, we may see participation falling for lack of job opportunity as much or even more than job-seeking motivation. The Average Work Week grew 0.3% to 35 hours, still below average full-time employment.

December’s Trade Deficit came in worse than expected — -$66.6 billion versus -$65.7 billion estimated — following a downwardly revised November to -$69.0 billion, which is now the worst-ever single-month read for U.S. deficit in trade. The last time we wallowed down at these levels, prior to our drop-off which began a year ago, was during the mortgage-based finance bubble which eventually was corrected after the bottom fell out in the Great Recession. Will part of the relief/stimulus package go to shore up these record levels of deficit?

The market is paying attention to none of this. Both the Dow and S&P 500 — fresh off new all-time highs as of Thursday’s close — have only gone up since these economic metrics were reported, while the Nasdaq — also enjoying a new all-time high — has dipped a bit to +30 points roughly 15 minutes before market open. It’s been a very good week in the markets, fueled by strong Q4 earnings reports and an appreciable leveling off of the retail/short-seller war taking place on platforms like Robinhood. The markets have regained their footing.