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The US Labor Department reported higher jobs on Friday for January as private payrolls surged. Non farm payrolls grew 225k. Unemployment ticked higehr to 3.6% Earlier private payroll company ADP reports that US jobs grew 291,000 in January, the highest since 2015.

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January 2019 U.S. Employment Report

The Fed Chair Powell came out with a more dovish tone as expected at the last FOMC cutting rates following market fatigue from the trade wars and the resultant uncertainty but welcomed acceptance of phase one. There has been an ongoing campaign by US Presdent Trump calling for lower rates and criticising the Federal Reserve for raising in the past year.  Federal Reserve President Powell and other Fed Governors have admitted they are unsure of the path for wages and inflation. In February American wages hit their highest levels in a decade at 3.4%, but has fallen back to 3.1% in January, lower than  expected

The market expected the January report released Friday to see nonfarm payrolls rise in line with longer-run trends in monthly employment growth at a consensus of 165,000 new jobs. Last month it came in lower at 145,000 but revised higher at 147,000. Logic suggests a return to the mean after the volatility in the hiring data. The wages data gives us indications of the FOMC plans on rates into 2019 and 2020. Unemployment is near a 49 year low with higher participation and the two month NFP revision was +7,000 change to jobs last month.

However, the combination of weaker PMI readings and skill shortages amid a low unemployment rate of 3.7% pose downside risks. More important could be the earnings data, which missed expectations in April and May. Any further cooling of pay growth would raise the odds of the FOMC’s next policy change being a rate cut.

US Jobs Jan 2020
 


Employment:

  • Non-farm payrolls +225k vs +165K expected, Prior +147K (revised from 145 K)
  • Unemployment rate 3.6% vs 3.5% expected/prior
  • Participation rate 63.4% vs 63.2% expected.prior (63.3% highest since 2014)
  • Underemployment rate 6.9% vs 6.7 % prior
  • Two month net revision +7k vs Prior -14K
  • Manufacturing payrolls -12k vs -2k expected (April was first loss since Oct 2016)
  • Private payrolls +206k vs 153k expected, 139K Prior

Wages:

  • Average hourly earnings +0.02% m/m v +0.1% m/m Prior/Expected
  • Average hourly earnings +3.1% y/y vs 3.0 % exp, Prior y/y
  • Average weekly hours  34.3 v 34.4 exp  Prior 34.4

US Jobs Jan 2020 Earnings by Industry

Household Survey Data

Both the unemployment rate, at 3.6 percent, and the number of unemployed persons, at 5.9 million, changed little in January.

Among the major worker groups, the unemployment rates for adult men (3.3 percent), adult women (3.2 percent), teenagers (12.2 percent), Whites (3.1 percent), Blacks (6.0 percent), Asians (3.0 percent), and Hispanics (4.3 percent) showed little or no change over the month.

Among the unemployed, the number of reentrants to the labor force increased by 183,000 in January to 1.8 million but was little changed over the year. (Reentrants are persons who previously worked but were not in the labor force prior to beginning their job search.)

The number of long-term unemployed (those jobless for 27 weeks or more), at 1.2 million, was unchanged in January. These individuals accounted for 19.9 percent of the unemployed.

After accounting for the annual adjustments to the population controls, the civilian labor force rose by 574,000 in January, and the labor force participation rate edged up by 0.2 percentage point to 63.4 percent. The employment-population ratio, at 61.2 percent, changed little over the month but was up by 0.5 percentage point over the year.

The number of persons employed part time for economic reasons, at 4.2 million, was essentially unchanged in January. These individuals, who would have preferred full-time employment, were working part time because their hours had been reduced or they were unable to find full-time jobs.

The number of persons marginally attached to the labor force, at 1.3 million, changed little in January.These individuals were not in the labor force, wanted and were available for work, and had looked for a job sometime in the prior 12 months. They were not counted as unemployed because they had not searched for work in the 4 weeks preceding the survey for a variety of reasons, such as belief that no jobs are available for them (referred to as discouraged workers), school attendance, or family responsibilities. Discouraged workers numbered 337,000 in January, little changed over the month.

US Jobs Jan 2020 Industry

Establishment Survey Data

Total nonfarm payroll employmentincreased by 225,000 in January, compared with an average monthly gain of 175,000 in 2019. Notable job gains occurred in construction, in health care, and in transportation and warehousing. 

In January, construction employment rose by 44,000. Most of the gain occurred in specialty trade contractors, with increases in both the residential (+18,000) and nonresidential (+17,000) components. Construction added an average of 12,000 jobs per month in 2019.

Health care added 36,000 jobs in January, with gains in ambulatory health care services (+23,000) and hospitals (+10,000). Health care has added 361,000 jobs over the past 12 months. Employment in transportation and warehousing increased by 28,000 in January. Job gains occurred in couriers and messengers (+14,000) and in warehousing and storage (+6,000).

Over the year, employment in transportation and warehousing has increased by 106,000. Employment in leisure and hospitality continued to trend up in January (+36,000). Over the past 6 months, the industry has added 288,000 jobs. Employment continued on an upward trend in professional and business services in January (+21,000), increasing by 390,000 over the past 12 months.

Manufacturing employment changed little in January (-12,000) and has shown little movement, on net, over the past 12 months.

Motor vehicles and parts lost 11,000 jobs over the month. Employment in other major industries, including mining, wholesale trade, retail trade, information, financial activities, and government, changed little over the month.

In January, average hourly earnings for all employees on private nonfarm payrolls rose by 7 cents to $28.44. Over the past 12 months, average hourly earnings have increased by 3.1 percent. Average hourly earnings of private-sector production and nonsupervisory employees were $23.87 in January, little changed over the month (+3 cents).

The average workweek for all employees on private nonfarm payrolls was unchanged at 34.3 hours in January. In manufacturing, the average workweek remained at 40.4 hours, while overtime edged down 0.1 hour to 3.1 hours. The average workweek of private-sector production and nonsupervisory employees edged up by 0.1 hour to 33.6 hours.

The change in total nonfarm payroll employment for November was revised up by 5,000 from +256,000 to +261,000, and the change for December was revised up by 2,000 from +145,000 to +147,000. With these revisions, employment gains in November and December combined were 7,000 higher than previously reported. (Monthly revisions result from additional reports received from businesses and government agencies since the last published estimates and from the recalculation of seasonal factors. The annual benchmark process also contributed to the November and December revisions job gains have averaged 211,000 over the last 3 months

The Employment Situation for February is scheduled to be released on Friday, March 6, 2020, at 8:30 a.m. (EST).

 

ADP US January Employment Report

ADP report +291K new jobs higher than an expected +158K which was the best reading since May 2015 The prior report was +202K, which was slightly revised down to +199K. 

Where ADP Saw New Jobs

  • Leisure and hospitality added 96,000 new jobs
  • Education and health services added 70,000 
  • Professional and business services added 49,000.
  • Construction rose by 47,000, the best growth since 62,000 added in January 2019
  • Manufacturing was up 10,000, the biggest monthly gain since last February.
  • Services added 237,000 positions compared with 54,000 for goods producers.
  • Trade transportation and utilities rose by 8,000,
  • Information and financial activities sectors both added 2,000 
  • Natural resources and mining was the sole loser with a drop of 2,000.

It is important to note weather was unseasonly warm and this really pumped the numbers   Leisure and hospitality and construction are both weather-sensitive and got big boosts from the higher than normal temperatures and litttle rain.  ADP's Zandi said as a reult the underlying trend for monthly job gains is about half of the January report, or around 150,000, still enough to maintain the unemployment rate.

ADP Jan 2020

Job expansion was concentrated in businesses that have 50 to 499 employees, with growth of 128,000. Small companies added 94,000 while large industries grew by 69,000. 

The ADP count comes two days ahead of the government’s  nonfarm payrolls report, which includes government jobs that ADP does not count. Job growth likely came in at 158,000 compared with the initially reported 145,000 in December, according to Dow Jones estimates. The unemployment rate is expected to hold at 3.5%, the lowest since December 1969. Note the ADP estimate can differ substantially differ on a month-to-month basis, as they did in December when ADP’s figure was well ahead of what the Labor Department reported. However, for all of 2019, ADP actually undershot the government count. ADP was an average of 162,000 per month compared with about 176,00 

 

December 2019 U.S. Employment Report

The Fed Chair Powell came out with a more dovish tone as expected at the last FOMC cutting rates following market fatigue from the trade wars and the resultant uncertainty but blins acceptance of phase one. There has been an ongoing campaign by US Presdent Trump calling for lower rates and criticising the Federal Reserve for raising in the past year.  Federal Reserve President Powell and other Fed Governors have admitted they are unsure of the path for wages and inflation. In February American wages hit their highest levels in a decade at 3.4%, but has fallen back to 2.9% in December, lower than  expected

The market expected the December report released Friday to see nonfarm payrolls rise in line with longer-run trends in monthly employment growth at a consensus of 160,000 new jobs, recovered from the GM strike. Last month it came in higher but revised higher at 256,000. Logic suggests a return to the mean after the volatility in the hiring data. The wages data gives us indications of the FOMC plans on rates into 2019 and 2020. Unemployment is near a 49 year low with higher participation and the two month NFP revision was -14,000 change to jobs last month.

However, the combination of weaker PMI readings and skill shortages amid a low unemployment rate of 3.7% pose downside risks. More important could be the earnings data, which missed expectations in April and May. Any further cooling of pay growth would raise the odds of the FOMC’s next policy change being a rate cut.


 US Jobs Dec 2019


Employment:

  • Non-farm payrolls +145k vs +160K expected, Prior +256K (revised from 266 K)
  • Unemployment rate 3.5% vs 3.5% expected/prior
  • Participation rate 63.2% vs 63.2% expected.prior (63.3% highest since 2014)
  • Underemployment rate 6.7% vs 6.9 % prior
  • Two month net revision -14k vs Prior +41K
  • Manufacturing payrolls -12k vs +5k expected, +40k Prior (April was first loss since Oct 2016)
  • Private payrolls +139k vs 153k expected, 178K Prior

Wages:

  • Average hourly earnings +0.02% m/m v +0.2% m/m Prior/Expected
  • Average hourly earnings +2.9% y/y vs 3.1% exp, Prior y/y
  • Average weekly hours  34.3 v 34.4 exp  Prior 34.4

 

US Jobs Dec 2019 Earnings by Industry 

Household Survey Data

In December, the unemployment rate held at 3.5 percent, and the number of unemployed persons was unchanged at 5.8 million. A year earlier, the jobless rate was 3.9 percent, and the number of unemployed persons was 6.3 million.

Among the major worker groups, the unemployment rates for adult men (3.1 percent), adult women (3.2 percent), teenagers (12.6 percent), Whites (3.2 percent), Blacks (5.9 percent), Asians (2.5 percent), and Hispanics (4.2 percent) showed little or no change in December.

The number of long-term unemployed (those jobless for 27 weeks or more), at 1.2 million, was unchanged in December and accounted for 20.5 percent of the unemployed.

The labor force participation rate was unchanged at 63.2 percent in December. The employment-population ratio was 61.0 percent for the fourth consecutive month but was up by 0.4 percentage point over the year.

The number of persons employed part time for economic reasons, at 4.1 million, changed little in December but was down by 507,000 over the year. These individuals, who would have preferred full-time employment, were working part time because their hours had been reduced or they were unable to find full-time jobs.

In December, 1.2 million persons were marginally attached to the labor force, down by 310,000 from a year earlier. (Data are not seasonally adjusted.) These individuals were not in the labor force, wanted and were available for work, and had looked for a job sometime in the prior 12 months. They were not counted as unemployed because they had not searched for work in the 4 weeks preceding the survey.

Among the marginally attached, there were 277,000 discouraged workers in December, down by 98,000 from a year earlier. (Data are not seasonally adjusted.) Discouraged workers are persons not currently looking for work because they believe no jobs are available for them. The remaining 969,000 persons marginally attached to the labor force in December had not searched for work for reasons such as school attendance or family responsibilities.

US Jobs Dec 2019 Industry

Establishment Survey Data

Total nonfarm payroll employment increased by 145,000 in December. Notable job gains occurred in retail trade and health care, while mining lost jobs. In 2019, payroll employment rose by 2.1 million, down from a gain of 2.7 million in 2018. 

In December, retail trade added 41,000 jobs. Employment increased in clothing and accessories stores (+33,000) and in building material and garden supply stores (+7,000); both industries showed employment declines in the prior month. Employment in retail trade changed little, on net, in both 2019 and 2018 (+9,000 and +14,000, respectively).

Employment in health care increased by 28,000 in December. Ambulatory health care services and hospitals added jobs over the month (+23,000 and +9,000, respectively). Health care added 399,000 jobs in 2019, compared with an increase of 350,000 in 2018.

Employment in leisure and hospitality continued to trend up in December (+40,000). The industry added 388,000 jobs in 2019, similar to the increase in 2018 (+359,000).

Mining employment declined by 8,000 in December. In 2019, employment in mining declined by 24,000, after rising by 63,000 in 2018.

Construction employment changed little in December (+20,000). Employment in the industry rose by 151,000 in 2019, about half of the 2018 gain of 307,000.

In December, employment in professional and business services showed little change (+10,000). The industry added 397,000 jobs in 2019, down from an increase of 561,000 jobs in 2018. Employment in transportation and warehousing changed little in December (-10,000). Employment in the industry increased by 57,000 in 2019, about one-fourth of the 2018 gain of 216,000.

Manufacturing employment was little changed in December (-12,000). Employment in the industry changed little in 2019 (+46,000), after increasing in 2018 (+264,000). In December, employment showed little change in other major industries, including wholesale trade, information, financial activities, and government.

In December, average hourly earnings for all employees on private nonfarm payrolls rose by 3 cents to $28.32. Over the last 12 months, average hourly earnings have increased by 2.9 percent. In December, average hourly earnings of private-sector production and nonsupervisory employees, at $23.79, were little changed (+2 cents). 

The average workweek for all employees on private nonfarm payrolls was unchanged at 34.3 hours in December. In manufacturing, the average workweek and overtime remained at 40.5 hours and 3.2 hours, respectively. The average workweek of private-sector production and nonsupervisory employees held at 33.5 hours.

The change in total nonfarm payroll employment for October was revised down by 4,000 from +156,000 to +152,000, and the change for November was revised down by 10,000 from +266,000 to +256,000. With these revisions, employment gains in October and November combined were 14,000 lower than previously reported. (Monthly revisions result from additional reports received from businesses and government agencies since the last published estimates and from the recalculation of seasonal factors.) After revisions, job gains have averaged 184,000 over the last 3 months

 The Employment Situation for January is scheduled to be released on Friday, February 7, 2020, at 8:30 a.m. (EST).

 

 

Source: AFP, Challanger, DOL, TradersCommunity Data, BLS

From The TraderCommunity Research Desk

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