February 4, 2022 Headlines

Treasury yields are up 8-10 basis points on the front of the curve following a much better than expected January jobs report. Earlier this week, the White House was reportedly guiding for a downside surprise due to Omicron disruptions, which markets priced for, but the actual report was just the opposite. Nonfarm payrolls added 467,000 jobs in January versus 199,000 expected, and the prior two months were revised higher by a combined 709,000 jobs. Perhaps more importantly, wage growth has also hotter than expected, rising 0.7% m/m (0.5% expected) and 5.7% y/y (5.2% expected). The year-over-year wage growth figure was up 100 bps from the prior month, and the wage growth was fairly broad-based across sectors.

In the household survey, the headline unemployment rate ticked up 10 bps to 4%, but for positive reasons. Household employment rose 1.2 million, but the official labor force rose by 1.4 million, sending the labor force participation rate up 30 bps to 62.2%. There was obviously no reason to sandbag this report earlier this week (a bit of a headscratcher). The strong wage growth figures are the biggest issue for the Fed, and this report does nothing to dissuade the crowd speculating on a 50 bps March rate hike, even if Fed leaders have talked it down recently.

Jason Haley
Chief Investment Officer

01/31/22MNI Chicago PMI61.565.263.164.3
01/31/22Dallas Fed Manf. Activity828.17.8
02/01/22Markit US Manufacturing PMI5555.555
02/01/22Construction Spending MoM0.60%0.20%0.40%0.60%
02/01/22ISM Manufacturing57.557.658.758.8
02/01/22ISM Prices Paid6776.168.2
02/01/22ISM New Orders5857.960.461
02/01/22ISM Employment5354.554.253.9
02/01/22JOLTS Job Openings10300k10925k10562k10775k
02/01/22Wards Total Vehicle Sales13.00m15.04m12.44m
02/02/22MBA Mortgage Applications12.00%-7.10%
02/02/22ADP Employment Change180k-301k807k776k
02/03/22Challenger Job Cuts YoY-76.00%-75.30%
02/03/22Nonfarm Productivity3.90%6.60%-5.20%-5.00%
02/03/22Unit Labor Costs1.00%0.30%9.60%9.30%
02/03/22Initial Jobless Claims245k238k260k261k
02/03/22Continuing Claims1620k1628k1675k1672k
02/03/22Markit US Services PMI50.951.250.9
02/03/22Markit US Composite PMI50.851.150.8
02/03/22ISM Services Index59.559.96262.3
02/03/22Factory Orders-0.40%-0.40%1.60%1.80%
02/03/22Factory Orders Ex Trans0.40%0.10%0.80%
02/03/22Durable Goods Orders-0.90%-0.70%-0.90%
02/03/22Durables Ex Transportation0.60%0.40%
02/03/22Cap Goods Orders Nondef Ex Air0.30%0.00%
02/03/22Cap Goods Ship Nondef Ex Air1.30%1.30%
02/04/22Revisions: Employment Report – Establishment Survey
02/04/22Change in Nonfarm Payrolls125k467k199k510k
02/04/22Two-Month Payroll Net Revision709k
02/04/22Change in Private Payrolls35k444k211k503k
02/04/22Change in Manufact. Payrolls20k13k26k32k
02/04/22Unemployment Rate3.90%4.00%3.90%
02/04/22Average Hourly Earnings MoM0.50%0.70%0.60%0.50%
02/04/22Average Hourly Earnings YoY5.20%5.70%4.70%4.90%
02/04/22Average Weekly Hours All Employees34.734.534.7
02/04/22Labor Force Participation Rate61.90%62.20%61.90%
02/04/22Underemployment Rate7.10%7.30%


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