A belated jobs surprise
Entering last week, the markets had expected January’s non-farm payrolls to be published on Friday. After disruptions to the frequency and quality of this statistic, published by the Bureau for Labor Statistics, yesterday’s data point had become all the more important. As last week progressed, it became apparent that the market was to be denied of that data point of its usual Friday release. That publication had been delayed until yesterday and was published at 13:30.
The data showed 130,000 jobs added, significantly higher than the 70,000 consensus forecast. Other forecasts projected January payrolls even lower – the Wall Street Journal’s survey for example produced a figure of just 55,000 jobs expected to be added last month. Further downstream, the realised figure translated into a drop in the unemployment rate to 4.3%. If you scratch beyond the surface of the headline non-farm payrolls number, the picture is more mixed with significant reductions in payrolls amongst federal government and financial activities positions.
As well as being highly influential upon the decision making of the Fed, we know that the labour force is particularly close to President Trump’s agenda. Recall last year, the dismissal of Erika McEntarfer was largely blamed upon a displeasing jobs report. The President is likely to welcome these numbers therefore but surely they are less commensurate with his agenda for interest rates. Yields pushed higher particularly towards the front end of the curve as traders moved to price out rate cuts later this year.
Discussion and Analysis by Charles Porter
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