Increase in number of job openings
January’s jobs report, which was much better than expected, shows that the Fed was absolutely correct in ruling out a March interest rate cut this week.flat A rate cut in May seems unlikely at this point..
The economy has also been added 353,000 jobs in January, confirming the decline in the labor market signaled by the number of job openings rising to 9 million in December. That was nearly double the consensus estimate of 185,000 and above the high end of the Econoday survey’s estimate of 153,000.
the important thing is, Employment growth was widespread.. In January, professional and business services added 74,000 jobs, manufacturing added 23,000 and retail added 45,000.
Salary growth is an important indicator. overall labor demand. Large but narrow gains may be explained by idiosyncratic factors that may be affecting one or two sectors. Broader benefits provide a better guide to potential labor demand and make it more sustainable. Widespread and particularly strong gains like January’s are a sign of deep economic strength. Growth is likely to accelerate.
Government employment did not drive January
While it’s fashionable to complain that much of the job growth is due to government jobs and therefore not a sign of the health of the private sector, that doesn’t seem to be the case in January. Government employment increases by 36,000 people, lower than last year’s average of 56,000 people. Of those, 11,000 are federal employees, excluding education, and 19,000 are state and local employees.
private payroll calculationMeanwhile, sales increased by 317,000, beating expectations of 142,000.
Even if we exclude what we sometimes call “Departments adjacent to government”The private sector has since added 217,000 jobs, including social assistance, health care, and education. The reason some analyzes exclude them is that many of the jobs are non-cyclical and do not indicate economic growth. However, this may only be partially true, as a significant portion of spending on these services is discretionary and therefore sensitive to business cycles.
Every time the headline numbers have a huge impact, seasonal adjustment, some may argue that we should look at the unadjusted numbers. These show that employment actually fell by 2.635 million jobs in January. However, employment contracts are always decided in January. As this chart from Zerohedge shows: The most recent recession in January was one of the smallest in recent years..
Seasonally adjusted January salary +365,000
Employment in January, without seasonal adjustment, decreased by 2,635,000. pic.twitter.com/USMGnCuree
— Zero Hedge (@zerohedge) February 2, 2024
As this long-term chart of seasonally adjusted data shows, there are no significant distortions caused by the adjustment.to go dating back to 1939the adjusted data tracks the raw data very closely.
stronger and longer
Almost as important as January’s explosive numbers. Upward revision for the past few months.
Many economists were skeptical when the first estimate in December was 216,000. Employment statistics have been revised downward in all but one of the past 11 months. Furthermore, the figure of 216,000 was much higher than expected and far removed from the narrative of “financial restrictive policies” that weakened the labor market. Many analysts simply choose not to believe the data. Rising interest rates should be painful by now. And if the data shows otherwise, then the data must be wrong.
Traders work on the floor of the New York Stock Exchange ahead of the interest rate decision by Chairman Jerome Powell on January 31, 2024 in New York City. (Michael M. Santiago/Getty Images)
the current, December This picture was wrong, but it meant something else. According to the revisions, the economy added 333,000 jobs in the final month of 2023, 117,000 more than originally reported.of November The figure was revised upward by 9,000 to 182,000, partially eliminating last month’s downward revision from the initial estimate of 199,000. OctoberThe number of employees was initially reported to be 150,000, but this was later revised upward to approximately 157,000.
In other words, gone are the days when official reports overestimated employment. Currently, upward revisions are being seen, Consecutive upward surprises compared to Wall Street estimates.
There are no signs that the labor market is deteriorating or softening. The three-month average increase in employment was 289,000.The labor market appears to be stable with high growth rate.
That should sound familiar, because that’s what we’ve been talking about. inflation. For the past few months, inflation appears to have stabilized above the Fed’s 2% target.
As is clear from employment statistics, There is no need for the Fed to rush to cut interest rates.. Indeed, there is reason to wait and see whether this kind of job growth is compatible with a return to target inflation.
Fed Chairman Jerome Powell’s comments Wednesday march cut removed from the table. The number of job openings is the next indicator. may cut The possibility is low, June cut It will depend on fairly large changes in labor demand.
This should start to raise questions about whether the Fed will cut rates this year.
