The Global Economy is slowing down, but the US economy is holding. the lower unemployment rate of 4%. As I previously said, before, that China (and most of Asia) are slowing down plus European economy. (Here)
- Deep dive in the Numbers
Friday morning, before the opening bell, the U.S. Labor Department reported that the economy added 304,000 jobs during the month of January, crushing expectations for a 165,000 gain. However, working to offset the huge beat, December’s reading was revised down to indicate a gain of 222,000 jobs (down from 312,000 reported previously, though November’s reading was revised up to 196,000 (from a gain of 176,000 previously reported). With these revisions, job gains have now averaged 241,000 over the last three months.
Despite the huge jobs number, the unemployment rate increased 0.1 percentage points to 4.0%, and while this may appear counterintuitive given the strong headline reading, it can be explained by looking at the participation rate — which accounts for the number of Americans looking for work or currently working — which also increased by 0.1 percentage points to 63.2%, indicating that more workers are returning to the labor force. A different, broader measure of unemployment and underemployment, known as the U-6 — which accounts for those working part-time because they are unable to find full-time work – increased to 8.1%, from 7.6% in December.
Deep Dive in the Numbers
In January, average hourly earnings for all employees on nonfarm payrolls increased by $0.3 to $27.56, following a $0.10 gain in December. Over the year, average hourly earnings (i.e., wage inflation) have increased $0.85, or 3.2%, in line with the annual rate of advance seen in December. As we noted in last month’s analysis, we believe a 3.2% annual advance to represent that wage inflation is under control. Remember, this reading is important to the Fed as the central bank uses it as an indicator for future expectations of inflation, and too hot of a number gives the Fed justification to raise interest rates to combat inflation.
Jobs gains were broad across many sectors. By sector, leisure and hospitality added 74,000 jobs in December; followed by an increased of 52,000 jobs in the construction sector; 42,000 in healthcare; 30,000 in professional and business services; 27,000 in transportation and warehousing; 21,000 in retail trade; 13,000 in manufacturing 7,000 in mining; and 1,000 in the federal government. There was little change, however, seen in wholesale trade, information and financial activities.