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A big upward surprise to January’s Employment Report from the U.S. Bureau of Labor Statistics (BLS) this morning both strengthens the outlook of the U.S. economy here in early 2022 and has sent the pre-market indexes sinking into the red. A total of 467K new jobs were created last month, more than triple the 150K expected, while the Unemployment Rate ticked up to 4.0% from 3.9% previously.
The private sector alone grew by 444K jobs, which is a far cry from the -301K private-sector jobs reported Wednesday in the ADP (ADP - Free Report) survey. Further, revisions from the previous two months were revised up by an unheard-of +709K, including a huge revision from December’s disappointing 199K originally reported to 510K for December now. As much as a boost to the domestic labor force, these numbers reported this morning continue to leave some doubt as to the accuracy of initial BLS headline figures.
The biggest news beneath the headline for January was the big upswing in Average Hourly Earnings, which cranked up +0.7%, matching the April 2021 high, with a year-over-year hourly earnings jump of +5.7% — a post-Covid high. In fact, prior to the pandemic, year-over-year Average Hourly Earnings was averaging just +3.0%. Labor Force Participation grew +0.3% month over month to 62.2 — interesting, as it had been stuck at a 61.9 high and broke higher at the peak of the Omicron variant, which was cited as the culprit to ADP’s weaker numbers earlier this week.
In fact, we may as well place an asterisk by all of this BLS data this morning, at least until revisions come out in the next couple months. Plenty of static regarding employment metrics occur at the start of the new year; adding the Omicron variables on top of this survey — which was taken precisely at the peak of Omicron in the U.S. — only makes conclusions dicier.
By industry, new job gains were strongest among the usual suspects of the past year, particularly Leisure & Hospitality, which again led the way. But we also saw strong growth in Professional/Business Services and a return to job gains in Manufacturing. So we’re back to seeing a robust labor force — depending on what the shakeout of the pandemic affects turn out to be — in the very places we saw healthy jobs growth previous to the Omicron variant.
This, then, allows for the “good news = bad news” discussion to transpire once again: with employment headed back toward full capacity and earnings rates higher and sticking, perhaps we’re back to believing the Fed is going to raise interest rates immediately upon its next policy meeting (mid-March), with as many as five hikes to follow before the year 2022 concludes. Which means the time for soft passivity on the part of the Fed is now a thing of the past; it is expected to look toward getting lean and mean going forward.
As a result, prior to the BLS numbers being released, we saw the Dow trading -150 points but the Nasdaq +90 and the S&P 500 flat. Within minutes of the positive surprise to jobs data, the Dow was -260 points, the Nasdaq -5 and the S&P -20. More recalibration out of growth equities while these new realities are processed is the name of the game on this last trading day of the week. The jury is out whether this will be the fifth-straight down week on the indexes.
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Nonfarm Payrolls Outperform in January
A big upward surprise to January’s Employment Report from the U.S. Bureau of Labor Statistics (BLS) this morning both strengthens the outlook of the U.S. economy here in early 2022 and has sent the pre-market indexes sinking into the red. A total of 467K new jobs were created last month, more than triple the 150K expected, while the Unemployment Rate ticked up to 4.0% from 3.9% previously.
The private sector alone grew by 444K jobs, which is a far cry from the -301K private-sector jobs reported Wednesday in the ADP (ADP - Free Report) survey. Further, revisions from the previous two months were revised up by an unheard-of +709K, including a huge revision from December’s disappointing 199K originally reported to 510K for December now. As much as a boost to the domestic labor force, these numbers reported this morning continue to leave some doubt as to the accuracy of initial BLS headline figures.
The biggest news beneath the headline for January was the big upswing in Average Hourly Earnings, which cranked up +0.7%, matching the April 2021 high, with a year-over-year hourly earnings jump of +5.7% — a post-Covid high. In fact, prior to the pandemic, year-over-year Average Hourly Earnings was averaging just +3.0%. Labor Force Participation grew +0.3% month over month to 62.2 — interesting, as it had been stuck at a 61.9 high and broke higher at the peak of the Omicron variant, which was cited as the culprit to ADP’s weaker numbers earlier this week.
In fact, we may as well place an asterisk by all of this BLS data this morning, at least until revisions come out in the next couple months. Plenty of static regarding employment metrics occur at the start of the new year; adding the Omicron variables on top of this survey — which was taken precisely at the peak of Omicron in the U.S. — only makes conclusions dicier.
By industry, new job gains were strongest among the usual suspects of the past year, particularly Leisure & Hospitality, which again led the way. But we also saw strong growth in Professional/Business Services and a return to job gains in Manufacturing. So we’re back to seeing a robust labor force — depending on what the shakeout of the pandemic affects turn out to be — in the very places we saw healthy jobs growth previous to the Omicron variant.
This, then, allows for the “good news = bad news” discussion to transpire once again: with employment headed back toward full capacity and earnings rates higher and sticking, perhaps we’re back to believing the Fed is going to raise interest rates immediately upon its next policy meeting (mid-March), with as many as five hikes to follow before the year 2022 concludes. Which means the time for soft passivity on the part of the Fed is now a thing of the past; it is expected to look toward getting lean and mean going forward.
As a result, prior to the BLS numbers being released, we saw the Dow trading -150 points but the Nasdaq +90 and the S&P 500 flat. Within minutes of the positive surprise to jobs data, the Dow was -260 points, the Nasdaq -5 and the S&P -20. More recalibration out of growth equities while these new realities are processed is the name of the game on this last trading day of the week. The jury is out whether this will be the fifth-straight down week on the indexes.