Treasury prices have settled to unchanged on the day an hour following the release of the December jobs report. Global equities are extending this week’s gains with no major headlines driving activity (Nikkei +0.9%, Hang Seng +0.3%, Euro Stoxx +1.0%), and the S&P 500 is up 0.4% in early trading. U.S. stocks are trading higher today despite what most consider to be a subpar jobs report (S&P 500 now +1.7% on the week).

Nonfarm payrolls added 148,000 jobs in December, and the net revision for the prior two months was -9,000 jobs. The headline growth number was solid, but at the same time, it was 42,000 below market expectations. A greater focus in recent months has been the wage growth data provided in this establishment survey. Average hourly earnings rose 0.3% in December, as expected, but many are also focusing on the downward revision to the November figure (0.2% to 0.1%). On a year-over-year basis, wage growth rose to 2.5% (as expected), and the average workweek was unchanged at 34.5 hours. In the household survey, the headline unemployment rate was unchanged at 4.1%, with household employment and the official labor force rising by 104,000 and 64,000, respectively. The U-6 underemployment rate did tick higher from 8% to 8.1%.

The monthly jobs reports are always (over)hyped in the markets. The skeptic (and former sell-side participant) in me would suggest this hype is fueled in the street (dealer community) by an incentive to increase trading volumes. This is not meant to be totally dismissive of the importance of the data provided, but as we often say, one month is not a trend. That’s not to mention the fact that there are several other metrics that can/need to be used to assess the health of the labor market and overall economy. That’s not to say that there aren’t reasonable criticisms of current economic conditions (there are), but job growth hasn’t been one of them for several years.

Jason Haley
Managing Director, Investment Management Group

DateEventSurv(M)ActualPriorRevised
01/02Markit US Manufacturing PMI5555.155
01/03MBA Mortgage Applications0.70%-3.50%
01/03Construction Spending MoM0.50%0.80%1.40%0.90%
01/03ISM Manufacturing58.259.758.2
01/03ISM Prices Paid64.56965.5
01/03ISM New Orders69.464
01/03ISM Employment5759.7
01/03FOMC Meeting Minutes
01/03Wards Total Vehicle Sales17.50m17.76m17.35m17.40m
01/03Wards Domestic Vehicle Sales13.35m13.72m13.38m13.46m
01/04Challenger Job Cuts YoY-3.60%30.10%
01/04ADP Employment Change190k250k190k185k
01/04U.S. Govt Delayed Opening, Jobless Claims Lockup is Canceled
01/04Initial Jobless Claims240k250k245k247k
01/04Continuing Claims1928k1914k1943k1951k
01/04Markit US Services PMI52.553.752.4
01/04Markit US Composite PMI54.153
01/04Bloomberg Consumer Comfort51.852.4
01/05Revisions: Seasonally Adjusted Household Survey data    
01/05Change in Nonfarm Payrolls190k148k228k252k
01/05Two-Month Payroll Net Revision-9k
01/05Change in Private Payrolls193k146k221k239k
01/05Change in Manufact. Payrolls18k25k31k
01/05Unemployment Rate4.10%4.10%4.10%
01/05Underemployment Rate8.10%8.00%
01/05Average Hourly Earnings MoM0.30%0.30%0.20%0.10%
01/05Average Hourly Earnings YoY2.50%2.50%2.50%2.40%
01/05Average Weekly Hours All Employees34.534.534.5
01/05Labor Force Participation Rate62.70%62.70%
01/05Trade Balance-$49.9b-$50.5b-$48.7b-$48.9b
01/05ISM Non-Manf. Composite57.655.957.4
01/05Factory Orders1.10%1.30%-0.10%0.40%
01/05Factory Orders Ex Trans0.80%0.80%1.20%
01/05Durable Goods Orders1.30%1.30%
01/05Durables Ex Transportation-0.10%-0.10%
01/05Cap Goods Orders Nondef Ex Air-0.20%-0.10%
01/05Cap Goods Ship Nondef Ex Air-0.10%0.30%