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.
Even though we know that Bernie and his alt-left compatriots will never tire of their endless "Fight for $15" no matter how much data we throw at them, we thought we would go ahead and highlight yet another economic study detailing the devastating job losses that will result from minimum wages hikes that have already been passed in states all around the country.
With Brazil stuck in what may be its worst depression on record, it will surprise nobody that the homicide rate in Rio de Janeiro climbed by 20% in 2016 from the previous year, as violence soared in the Brazilian metropolis amid rising unemployment and sharp cuts in public security budgets. Worse even than Chicago, state security statistics released on Wednesday and cited by Reuters showed that 5,033 people were murdered in Rio during the year, up from 4,200 in 2015.