Announced this morning, the economy added 517,000 jobs in January, much higher than expected and the previous month was revised higher. The Leisure and Hospitality industry was strong, adding 128,000 jobs, while the Motor Vehicle and Parts industry was relatively weak. The Unemployment Rate decreased one-tenth to 3.4% and the Labor Force Participation Rate at 62.4% is one-tenth higher. Average Hourly Earnings increased 0.3% in January, as expected, and is 4.4% higher on an annual basis. In addition, Average Weekly Hours was 34.7, which three tenths higher than the previous month.
Overall, an extremely strong jobs report with the headline number over 500k coupled with a drop in the unemployment rate. Service jobs, as noted in the leisure and hospitality industry figures, also showed increases which is important given the makeup of the economy. Furthermore, average hourly earnings grew at a slightly slower pace compared to last month’s revised figure and the participation rate ticked higher. Given all the post-pandemic dynamics, it is proving difficult for the policy tightening efforts of the Federal Reserve to negatively affect the labor market. The race between falling inflation and when the labor market will show signs of weakening will be a key dynamic for the direction of the Fed’s policy and the economy in the months ahead.
Following the release of the jobs report, the U.S. 10-year treasury yield ticks markedly higher and equity futures are lower as we head into the market open.
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