According to the January employment report, the US economy added 304,000 jobs in January. Analysts at Wells Fargo point out the data is consistent with the trend in hiring remaining strong. Regarding the increase in the unemployment rate, they consider should not worry the Federal Reserve given higher participation and shutdown effects.
Key Quotes:
“Employers added 304K new workers, almost twice as high as consensus expectations. But whereas we and other forecasters were expecting a correction in January for December’s sky-high print, the payback showed up in terms of a sharp downward revision, with employers adding “only” 222K workers in the final month of the year, 90K fewer than initially reported.”
“Through the usual monthly revisions and annual benchmark revisions, the trend over the past three months remains impressive with an average of 241K jobs.”
“Strains from slowing global growth, trade tensions and the elevated value of the dollar may be beginning to weigh on the manufacturing sector, where the 13K increase in payrolls was the smallest since August and December’s increase was revised lower by 12K.”
“Unlike in the payroll survey, furloughed workers were considered unemployed on temporary layoff, which contributed to the unemployment rate rising back to 4.0%. But also like the initial December report, the increase came amid a jump in labor force participation. The January report included annual population adjustments without revisions to previous data, making month-to-month comparisons less telling.”
“We expect the trend in hiring to slow over the course of this year as economic growth moderates and the tight state of the labor market makes it difficult for firms to fill vacant positions. Yet the unemployment rate should continue to move down while wage growth should strengthen further, meaning it is too early to write off additional Fed tightening later this year.”
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