Friday, February 1, 2013
There is no shortage of economic and earnings data this morning, but the focus remains on the labor market with the January non-farm payroll report. The jobs numbers were a tad bit lighter than expected, but the revisions to the prior two months makes the labor market picture somewhat better. Also on tap for release a later are the January manufacturing ISM Index and the final University of Michigan Sentiment Survey for January. And let’s not forget about the fourth quarter earnings season that brought us positive looking numbers from Exxon (XOM) this morning, though Merck’s (MRK) outlook doesn’t look that reassuring.
The ‘headline’ January jobs numbers of 157K were modestly shy of expectations of 165K. The consensus estimate did not rise much following the strong report from ADP on Wednesday, but many of us were still looking for a bigger number this morning. The saving grace came from revisions, which was decidedly on the positive side. The December tally was revised to 196K from 155K, while the November was revised higher to 247K from the 161K originally reported. The unemployment rate ticked up to 7.9% from 7.8%. The average work week remained unchanged, while average hourly earnings increased 0.2%. The labor force participation rate remained unchanged at 63.6% in January.
Private sector jobs totaled 166K in December, significantly below December’s 202K level (December’s tally was revised higher from 168K) and November’s 256K level (revised upwards from 171K). The January gains were concentrated in retail, construction, and healthcare. Jobs in the retail sector increased by 33K in December, compared to the 2012 monthly rate of 20K. Construction jobs increased by 28K in January, with most of the gains coming from specialty trade contractors. To put the momentum in this key sector in context, roughly one third of the 296K construction jobs added since January 2011 have occurred in the last four months. Healthcare added 23K in January, adding 320K jobs in 2012. Manufacturing jobs were essentially unchanged in January, having changed little since the middle of 2012.
Today’s report shows that the average monthly jobs tally has been fairly stable in the last two years, though the revisions have helped improve the monthly tally for 2012 a bit. Importantly, the revisions show that negative backdrop of ‘Fiscal Cliff’ related uncertainty has not had much of a dampening effect on hiring trends. And given the historical uncertainty associated with the January data, one could safely assume that today’s numbers will most likely revised higher in the coming months. Hard tell though whether that is good enough at this stage to put the market back on its upward trajectory. It’s definitely not bad.
Director of Research
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