💵 500 Gazillion Jobs

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Sooooo, that jobs report was a bit crazy. Even the way above consensus calls from Citi & Goldman (for 300k plus) fell short of the 517k reported. Is it all a bit too good to be true?

Here's the trimmed Newsquawk summary 👇

517k jobs added (exp. +185k; prev. revised up to 260k from 223k) the highest since August 2022, while the unemployment rate saw a surprise fall again to 3.4% from 3.5% (exp. 3.6%), the lowest since 1969.

The silver lining will be the average hourly wage growth remaining at the 0.3% M/M pace, albeit the Y/Y fell to 4.4%, less than the expected 4.3%, while the prior was upwardly revised to 4.8% from 4.6%.

Looking further into the report, manufacturing, retail, leisure, and professional & business services jobs led the gains. Average weekly hours jumped to 34.7 from 34.4, "another sign that labour demand is stronger than previously thought", Capital Economics says.

Meanwhile, the annual benchmark revisions point to an even stronger labour market than previously thought, with overall payrolls last year being bumped up by 813k, albeit those revisions were concentrated around the middle of last year with the latter months seeing more modest revisions.

That's entirely insane. Almost to the point of being unbelievable. 813,000 more jobs were added last year than previously thought. On top of that, November and December's figures were revised higher too, by 71k between the two months.

Summing up with today's 517k, there were 1.4 million additional jobs announced in this report.

Now, the other side of that... 👇

 That means that the household survey estimates are NOT directly comparable between December and January. And sometimes, it can make a really big difference -- as it did last year, when if you missed the adjustments, you'd get the whole interpretation of the report wrong. pic.twitter.com/pFAG3Ksgrd— Ben Casselman (@bencasselman) February 2, 2023 

So, these weird population and seasonal adjustments can distort the precise figures...

There's no doubt this is still a strong labour market. The US economy is holding up well despite some cracks starting to show in big tech earnings figures.  

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The White House added some further context here 👇

Wage growth is still running at 0.3% MoM or 4.4% YoY...

Sooooo, no rate cuts?

Fed Chair Powell said this week that “nominal wages have been growing at a pace well above what would be consistent with 2% inflation over time.... another condition we are looking for is the restoration of balance between supply and demand in the labor market.”

We're definitely not there yet. And the ISM survey pointed to a rebounding services sector too (where inflation tends to be stickier) 👇

The prices paid metric is a nod towards stickier inflation. Add in the general uptick in orders and activity to back up the rise in consumer confidence and the more positive outlook is hard to ignore.

How long for is anyone's guess.

After Powell's 'dovish' post FOMC speech - will he put on a big performance Tuesday to reinforce the Higher For Longer path in the Fed's projections?

If wage growth and/or inflation start picking up again, things could get REALLY interesting. For now, the US economy is just belligerently refusing to roll over and die.