Although officials from White House and Fed have warned one after another, saying that the US non-farm employment data in January may be very "ugly", the actual results were unexpectedly strong and basically exceeded market expectations in every aspect. US President Biden said on Friday that January employment data showed that the US economy is no longer affected by the new crown epidemic.
htmlNew employment in January far exceeded expectations, and wage growth confirmed inflation pressure
Data released by the US Department of Labor on Friday showed that the number of non-farm employment in the United States in January was 467,000, far exceeding market expectations and previous value levels. Economists surveyed by Dow Jones expected a new number of 150,000, compared with the previous value of 199,000. At the same time, the unemployment rate in January was 4%, slightly exceeding the market's expectations of 3.9%.
The US labor force participation rate rose to 62.2% in January, an increase of 0.3% month-on-month, and exceeded the expected level by 61.9%. The index hit its highest level since March 2020. If the number of people who are not actively looking for jobs and who are engaged in part-time jobs due to financial reasons is included, the unemployment rate will drop by 0.2% to 7.1%, just slightly higher than the pre-pandemic level. Among them, the number of people who only worked part-time due to economic reasons in January fell to 212,000, a year-on-year decrease of 37%.
Among the non-agricultural employment in January, the leisure and hotel industry recruited the largest number of people, with a total of 151,000 new jobs, of which 108,000 new jobs were created in bars and restaurants. The professional and service industry added 86,000 new people, ranked second, retail trade added 61,400 new people, transportation and warehousing industry added 54,200 new people, and government departments added 23,000 new people. In addition, information, wholesale trade, health care and social assistance, manufacturing, financial activities, etc. all recorded an increase, but the number of new jobs in mining, logging and construction industries declined. It is worth noting that although the leisure and hotel industries have recorded an average of 196,000 new jobs in the past 12 months, the industry still lacks 1.8 million jobs compared with the level in February 2020 before the epidemic, a drop of 10.3%.
The highly-watched wage growth has also grown rapidly. The average hourly wage in the United States increased by 5.7% year-on-year and 0.7% month-on-month, both exceeding expectations. Although wage increases hit the largest since May 2020, the growth rate still lags behind inflation . According to consumer price index (CPI) data, inflation rose 7% year-on-year in December to the highest level in nearly 40 years. In addition, the sharp increase in wages also reflects that the labor market across the United States is still tight.
. Among the new number of people in the transportation and warehousing industry, thousands of couriers returned to work. In January, the number of workers responsible for receiving and delivering parcel mail increased by 21,200, and the number of warehousing personnel increased by 13,400. It is worth noting that the United States recruited 7,500 truck drivers in January, ranking third in the past 12 months. The U.S. Department of Labor said in a press release that employment growth in express delivery, warehousing, trucking and air transport in January exceeded the February 2020 level, with warehousing and express growth particularly strong. Before the release of
data, White House officials once warned in advance that the peak of the epidemic caused by Omickron strain will lead to a temporary labor shortage, and millions of Americans left their jobs due to illness or taking care of their families. According to data from the US Centers for Disease Control and Prevention (CDC), the number of cases of new crown in the United States has declined in recent weeks, with the average daily number of new crown cases on the 7th day falling by more than 50% compared with the peak in mid-January. Most economists have believed that the peak of the epidemic will have a temporary impact on the job market.
In addition to the unexpectedly exceeding expectations in January's non-farm employment data, the data in the previous few months also received a significant upward correction. The non-farm employment data in December was revised up from 199,000 to 510,000, and the November data was increased from 249,000 to 647,000, an increase of 709,000 in two months. The number of new non-agricultural jobs in 2021 reached 6.665 million after adjustment, the largest single-year increase in US history.
employment data is strong, the Fed's rate hike in March 1 is sure to be on the board.
's unexpectedly strong employment data basically makes the Fed's rate hike in March. Wells Fargo economists Sarah House and Michael Pugliese commented on Friday that non-farm jobs data in January consolidated the bank's expectations for the Federal Reserve to start hikes in March.The recovery of the labor market easily overcomes the challenges caused by the Omickron epidemic. Overall, the total number of employed people has decreased by 2.9 million from the peak in February 2020.
Wells Fargo believes that despite the emergence of the Omickron mutation strain, the strong employment data provide evidence for the Federal Reserve, confirming that the national economy has gradually recovered from the epidemic. In addition, the increase in wages and the rebound in labor participation rate gave the Federal Reserve dovish officials a reassurance, indicating that the Federal Reserve's hawkish position has been correct in the recent past. Wells Fargo also expects that February non-farm employment data to be released on March 4 may show some weakness, but will not change the Federal Reserve's tightening plan. The first rate hike since 2018 will surely happen in March.
Previously, according to the monthly job vacancies and labor turnover rate survey (JOLTS) released by the U.S. Department of Labor on Tuesday, the number of job vacancies in the United States reached 10.925 million in December, an increase of 1.4% month-on-month and exceeded expectations, indicating that the US labor market is still tight. Nick Bunker, head of research at Indeed Hiring Lab, believes that the peak of the epidemic caused by the Omickron strain has not completely impacted the labor market in December. Demand for workers remains strong, with the number of layoffs hitting record lows. At the same time, according to the data from the Department of Labor on Thursday, the number of people applying for unemployment benefits in the United States fell for the second consecutive week last week, which also indicates that the US labor market is rebounding from the impact caused by the Omickron strain.
Although the non-farm employment data performed unexpectedly strong and exceeded expectations on Friday, it further proved that the rising inflationary pressure will inevitably have a further impact on the Federal Reserve's monetary policy, and investors are still weighing the pros and cons of the two. Barry Gilbert, asset allocation strategist at LPL Financial Corporation, said that for the market, employment data is completely linked to Fed policy. In Friday's data, new jobs and wage growth both surprised the market, which will keep the Fed on track to start hikes in March this year and at least four times this year.
1 salary increase further confirms the inflationary pressure in the United States. Former U.S. Treasury Secretary Lawrence Summers said the market needs to prepare for the possibility that the Fed will raise interest rates every time in the remaining seven meetings this year, and will even add more than 25 basis points at one time. Bank of America predicts the Fed will announce interest rate hikes at all meetings next year, while Nomura Holdings predicted the Fed will raise interest rates by 50 basis points last week.
Driven by non-farm employment data, the 10-year Treasury bond yield exceeded 1.9% to 1.93%, the highest level since December 2019.
