Payrolls grew by a whopping 517k, well more than the estimate of 188k and the two prior months were revised up by 71k. That’s the biggest one month job gain since February 2022. The private sector made up 443k of this job gain with the balance from the government. The household survey said 894k jobs were added in January while the labor force grew by 866k with the net result seeing a one tenth drop in the unemployment rate to 3.4%, now below the pre Covid low. The all in U6 rate rose one tenth to 6.6%.
Also of note, the work week jumped to 34.7 from 34.4, matching the highest since December 2021. The participation rate was up one tenth to 62.4% and rose 3 tenths for the important 25-54 age cohort and compares with 83% in February 2020. Hourly earnings rose by .3% m/o/m and up by 4.4% y/o/y. Combining the two saw average weekly earnings up 4.7% y/o/y. Job leavers jumped to 15.3%, just below its highs.
The service sector added 397k jobs, an acceleration from the 226k in December and 187k in November. Leisure/hospitality and private education/health services led the way, as they usually do. Professional services added 82k after 39k in December and none in November. Retail hired a net 30k and temp did by 26k after two months of declines. Manufacturing added 19k and construction hired a net 25k.
Bottom line, you can drive a truck thru the private sector figure that ADP said was added in January of 106k and what the BLS said today of 443k. I’m more of a believer of what ADP said, especially because of the payroll slips they have in hand and also seeing the employment stats in PMI, ISM and continuing claims. That said, if the BLS is anywhere close to be accurate though, productivity literally plunged in January because many parts of the economy are contracting, particularly in housing and manufacturing and Q1 GDP will most likely be negative. Profit margins too will continue to contract.
The 2 yr yield is jumping by 14 bps to 4.25% and is now UP on the week and the 10 yr yield is higher by 11 bps, back to flat on the week. The dollar is stronger in response and as for the Fed, while they might have just one hike left, higher for longer is in itself a continued form of monetary tightening just as keeping rates at zero for a while is meant to be perpetually easing. And I’m amazed at how many just ignore ongoing QT.
Peter is the Chief Investment Officer at Bleakley Advisory Group and is a CNBC contributor. Each day The Boock Report provides summaries and commentary on the macro data and news that matter, with analysis of what it all means and how it fits together.