| Consensus | Consensus Range | Actual | Previous | Revised | |
|---|---|---|---|---|---|
| Nonfarm Payrolls - M/M | 168,000 | 125,000 to 225,000 | 143,000 | 256,000 | 307,000 |
| Unemployment Rate | 4.1% | 4.0% to 4.2% | 4.0% | 4.1% | |
| Private Payrolls - M/M | 140,000 | 95,000 to 200,000 | 111,000 | 223,000 | 273,000 |
| Manufacturing Payrolls - M/M | 5,000 | -10,000 to 25,000 | 3,000 | -13,000 | -12,000 |
| Participation Rate | 62.6% | 62.5% | |||
| Average Hourly Earnings - M/M | 0.3% | 0.3% to 0.4% | 0.5% | 0.3% | |
| Average Hourly Earnings - Y/Y | 3.8% | 3.7% to 3.9% | 4.1% | 3.9% | 4.1% |
| Average Workweek | 34.3hrs | 34.3hrs to 34.3hrs | 34.1hrs | 34.3hrs | 34.2hrs |
Highlights
Nonfarm payrolls are up 143,000 in January after a net upward revision of 100,000 in the prior two months. The increase in January is below the consensus of up 168,000 in the Econoday survey of forecasters. The increase is consistent with moderate hiring at a pace able to absorb new entrants to the labor market as well as workers already there and looking for work.
The January report includes annual benchmark revisions. The preliminary benchmark revision published in March 2024 was for a decrease of 818,000. Nonetheless, the present job market is healthy and showing little sign of deterioration.
Private payrolls are up 111,000 in January with flat payroll growth in the goods-producing sector and increase entirely among service-providers. Most of January's payroll growth is attributable to gains of 34,300 in retail trade and 43,700 in health care. Government payrolls are up 32,000 with increases of 3,000 in state government excluding education and 21,000 in local government.
Average hourly earnings rose 0.5 percent in January from December and may include some mandated raises in minimum wages. Average hourly earnings are up 4.1 percent compared to January 2024 and in line with the pace of increases seen in the last six months. Overall, while upward pressure on wages has eased, it remains above pre-pandemic levels.
The unemployment rate is down a tenth to 4.0 percent in January. The U6 unemployment rate the broadest measure of unemployment is unchanged at 7.5 percent in January. The number of employed persons rose 2.234 million to 163.895 million, while the number of unemployed is down 37,000 to 6.849 million. However, the number of persons working part-time for economic reasons is up 119,000 to 4.477 million.
The labor force participation rate is up a tenth to 62.6 percent in January. The increase is not particularly meaning full as the rate has been stuck within a tenth or two of that percentage for nearly two years.
Fed policymakers will find little in this report to suggest that the labor market is anything but solid at the moment, although there are significant uncertainties on the near horizon due to changes in government policies. As far as the dual mandate is concerned, the US economy continues to meet the standard of maximum employment against the demand of maintaining price stability.
The January report includes annual benchmark revisions. The preliminary benchmark revision published in March 2024 was for a decrease of 818,000. Nonetheless, the present job market is healthy and showing little sign of deterioration.
Private payrolls are up 111,000 in January with flat payroll growth in the goods-producing sector and increase entirely among service-providers. Most of January's payroll growth is attributable to gains of 34,300 in retail trade and 43,700 in health care. Government payrolls are up 32,000 with increases of 3,000 in state government excluding education and 21,000 in local government.
Average hourly earnings rose 0.5 percent in January from December and may include some mandated raises in minimum wages. Average hourly earnings are up 4.1 percent compared to January 2024 and in line with the pace of increases seen in the last six months. Overall, while upward pressure on wages has eased, it remains above pre-pandemic levels.
The unemployment rate is down a tenth to 4.0 percent in January. The U6 unemployment rate the broadest measure of unemployment is unchanged at 7.5 percent in January. The number of employed persons rose 2.234 million to 163.895 million, while the number of unemployed is down 37,000 to 6.849 million. However, the number of persons working part-time for economic reasons is up 119,000 to 4.477 million.
The labor force participation rate is up a tenth to 62.6 percent in January. The increase is not particularly meaning full as the rate has been stuck within a tenth or two of that percentage for nearly two years.
Fed policymakers will find little in this report to suggest that the labor market is anything but solid at the moment, although there are significant uncertainties on the near horizon due to changes in government policies. As far as the dual mandate is concerned, the US economy continues to meet the standard of maximum employment against the demand of maintaining price stability.
Market Consensus Before Announcement
Forecasters expect a decent rise of 168,000 even as winter weather may depress job growth in the January report. Forecasts call for no change in the jobless rate at 4.1 percent. Lots of interest in revised figures for 2024 which are expected to show significant downward revision.
Definition
The most closely watched of all economic indicators, the employment situation is a set of monthly labor market indicators based on two separate reports: the establishment survey which tracks 650,000 worksites and offers the nonfarm payroll and average hourly earnings headlines and the household survey which interviews 60,000 households and generates the unemployment rate.
Nonfarm payrolls track the number of part-time and full-time employees in both business and government. Average hourly earnings track employee pay while the average workweek, also part of the establishment survey, tracks the number of hours worked. The report's private payroll measure excludes government workers.
The unemployment rate measures the number of unemployed as a percentage of the labor force. In order to be counted as unemployed, one must be actively looking for work. Other commonly known data from the household survey include the labor supply and discouraged workers.
Nonfarm payrolls track the number of part-time and full-time employees in both business and government. Average hourly earnings track employee pay while the average workweek, also part of the establishment survey, tracks the number of hours worked. The report's private payroll measure excludes government workers.
The unemployment rate measures the number of unemployed as a percentage of the labor force. In order to be counted as unemployed, one must be actively looking for work. Other commonly known data from the household survey include the labor supply and discouraged workers.
Description
If ever there was an economic report that can move the markets, this is it! The anticipation on Wall Street each month is palpable, the reactions can be dramatic, and the information for investors is invaluable. By digging just a little deeper than the headline unemployment rate, investors can take more strategic control of their portfolio and even take advantage of unique investment opportunities that often arise in the days surrounding this report.
The employment data give the most comprehensive report on how many people are looking for jobs, how many have them, what they're getting paid and how many hours they are working. These numbers are the best way to gauge the current state as well as the future direction of the economy. Nonfarm payrolls are categorized by sectors. This sector data can go a long way in helping investors determine in which economic sectors they intend to invest.
The employment statistics also provide insight on wage trends, and wage inflation is high on the list of opponents of easy monetary policy. Fed officials constantly monitor this data watching for even the smallest signs of potential inflationary pressures, even when economic conditions are soggy. If inflation is under control, it is easier for the Fed to maintain a more accommodative monetary policy. If inflation is a problem, the Fed is limited in providing economic stimulus.
By tracking the jobs data, investors can sense the degree of tightness in the job market. If wage inflation threatens, it's a good bet that interest rates will rise; bond and stock prices will fall. No doubt that the only investors in a good mood will be the ones who watched the employment report and adjusted their portfolios to anticipate these events. In contrast, when job growth is slow or negative, then interest rates are likely to decline - boosting up bond and stock prices in the process.
Importance
The employment situation is the primary monthly indicator of aggregate economic activity because it encompasses all major sectors of the economy. It is comprehensive and available early in the month. Many other economic indicators are dependent upon its information. It not only reveals information about the labor market, but about income and production as well. In short, it provides clues about other economic indicators reported for the month and plays a big role in influencing financial market psychology during the month. Additionally, the Fed has made 6.5 percent unemployment a threshold for considering changes in policy - both for quantitative easing and the fed funds rate. And the Fed has emphasized that it is overall labor market conditions that matter - not just a specific number.
Interpretation
The bond market will rally (fall) when the employment situation shows weakness (strength). The equity market often rallies with the bond market on weak data because low interest rates are good for stocks. But sometimes the two markets move in opposite directions. After all, a healthy labor market should be favorable for the stock market because it supports economic growth and corporate profits. At the same time, bond traders are more concerned about the potential for inflationary pressures.
The unemployment rate rises during cyclical downturns and falls during periods of rapid economic growth. A rising unemployment rate is associated with a weak or contracting economy and declining interest rates. Conversely, a decreasing unemployment rate is associated with an expanding economy and potentially rising interest rates. The fear is that wages will accelerate if the unemployment rate becomes too low and workers are hard to find.
Nonfarm payroll employment indicates the current level of economic activity. Increases in nonfarm payrolls translate into earnings that workers will spend on goods and services in the economy. The greater the increase in employment, the faster is the total economic growth. When the economy is in the mature phase of an expansion, rapid increases in employment cause fears of inflationary pressures if rapid demand for goods and services cannot be met by current production.
When the average workweek trends up, it supports production gains in the current period and portends additional employment increases. When the average workweek is in a declining mode, it probably is signaling a potential slowdown in employment growth-or even outright declines in employment in case of recession.
Gains in average hourly earnings represent wage pressures. It is worth noting that these figures aren't adjusted for overtime pay or shifts in the composition of the workforce, which affects wages on its own. Market participants believe that a rising trend in hourly earnings will lead to higher inflation. But if increased wages are matched by productivity gains, producers likely will not increase product prices with wages because their unit labor costs are stable.
The employment data give the most comprehensive report on how many people are looking for jobs, how many have them, what they're getting paid and how many hours they are working. These numbers are the best way to gauge the current state as well as the future direction of the economy. Nonfarm payrolls are categorized by sectors. This sector data can go a long way in helping investors determine in which economic sectors they intend to invest.
The employment statistics also provide insight on wage trends, and wage inflation is high on the list of opponents of easy monetary policy. Fed officials constantly monitor this data watching for even the smallest signs of potential inflationary pressures, even when economic conditions are soggy. If inflation is under control, it is easier for the Fed to maintain a more accommodative monetary policy. If inflation is a problem, the Fed is limited in providing economic stimulus.
By tracking the jobs data, investors can sense the degree of tightness in the job market. If wage inflation threatens, it's a good bet that interest rates will rise; bond and stock prices will fall. No doubt that the only investors in a good mood will be the ones who watched the employment report and adjusted their portfolios to anticipate these events. In contrast, when job growth is slow or negative, then interest rates are likely to decline - boosting up bond and stock prices in the process.
Importance
The employment situation is the primary monthly indicator of aggregate economic activity because it encompasses all major sectors of the economy. It is comprehensive and available early in the month. Many other economic indicators are dependent upon its information. It not only reveals information about the labor market, but about income and production as well. In short, it provides clues about other economic indicators reported for the month and plays a big role in influencing financial market psychology during the month. Additionally, the Fed has made 6.5 percent unemployment a threshold for considering changes in policy - both for quantitative easing and the fed funds rate. And the Fed has emphasized that it is overall labor market conditions that matter - not just a specific number.
Interpretation
The bond market will rally (fall) when the employment situation shows weakness (strength). The equity market often rallies with the bond market on weak data because low interest rates are good for stocks. But sometimes the two markets move in opposite directions. After all, a healthy labor market should be favorable for the stock market because it supports economic growth and corporate profits. At the same time, bond traders are more concerned about the potential for inflationary pressures.
The unemployment rate rises during cyclical downturns and falls during periods of rapid economic growth. A rising unemployment rate is associated with a weak or contracting economy and declining interest rates. Conversely, a decreasing unemployment rate is associated with an expanding economy and potentially rising interest rates. The fear is that wages will accelerate if the unemployment rate becomes too low and workers are hard to find.
Nonfarm payroll employment indicates the current level of economic activity. Increases in nonfarm payrolls translate into earnings that workers will spend on goods and services in the economy. The greater the increase in employment, the faster is the total economic growth. When the economy is in the mature phase of an expansion, rapid increases in employment cause fears of inflationary pressures if rapid demand for goods and services cannot be met by current production.
When the average workweek trends up, it supports production gains in the current period and portends additional employment increases. When the average workweek is in a declining mode, it probably is signaling a potential slowdown in employment growth-or even outright declines in employment in case of recession.
Gains in average hourly earnings represent wage pressures. It is worth noting that these figures aren't adjusted for overtime pay or shifts in the composition of the workforce, which affects wages on its own. Market participants believe that a rising trend in hourly earnings will lead to higher inflation. But if increased wages are matched by productivity gains, producers likely will not increase product prices with wages because their unit labor costs are stable.
