Just last week, Americans were reassured (twice) that everything is awesome in the US labor market as ADP and BLS data showed jobs-jobs-jobs everywhere. However, along with wage stagnation (and a rising unemployment rate), there is a bigger problem, as Deutsche Bank warns, aside from soft earnings, hiring at America’s biggest companies is slowing down for the first time since 2010.
No Rate Hike for You
Here's Chris Barraud's quick analysis of the Unemployment numbers this morning. He is one of the people that MarketSlant follows closely
#US (7) | The unemployment rate, unrounded, ? to 4.780% (vs 4.716% prior) because of a ? in the participation rate (62.9% vs 62.7% prior)
— Christophe Barraud (@C_Barraud) February 3, 2017
Here are the rest of his comments on the report as tweeted:
Following today's jobs report, the market's reaction to the unexpectedly strong January payrolls visualized in the charts below, is straightforward: the disappointing wage growth is an indication that the Fed may not hike rates for quite a bit longer than expected, and will likely will be forced to reduce its rate hike expectations from 3 to 2 (in line with the market) or fewer if wage growth continue to stagnate.
While in recent months, we had documented that job growth was mostly observed in lower, or minimum-wage paying, jobs, in January, when as the BLS earlier reported the US added some 227K jobs, the increase was uniform across virtually all job sectors, with only Government and Transportation and Warehousing jobs declining by 10,000 and 4,000, respectively. All other sectors saw an increase in employees.
The breakdown is as follows:
Despite ADP's blowout print this week, consensus January payrolls is 175k (somewhat below the 6- and 12-month averages), but Goldman Sachs expects a higher 200k print thanks to a combination of lower-than-usual year-end layoffs, favorable weather effects, and further improvement in labor market indicators.