The US economy added a net 243k jobs in Jan, 257k of which was in the private sector and both are well above expectations of 140k and 160k respectively. Revisions to the two prior months were up by 60k and the unemployment rate fell to 8.3% from 8.5% as while 508k people joined the labor force, a whopping 847k jobs were added in the household employment survey. The U6 unemployment rate fell to 15.1% from 15.2%. Manufacturing added 50k jobs, 38k more than expected and construction saw gains of 21k. Job gains were also seen in retail, business services, education/health, and leisure/hospitality. Total government employment fell by a net 14k. The avg workweek was 34.5 vs est of 34.4 and the avg duration of unemployment did tick down to 40.1 from 40.8. Remaining a negative, the participation rate fell to a new low of 63.7% from 64.0% and avg hourly earnings rose just 1.9% vs CPI at 3.0% and the PCE at 2.4%. Bottom line, this is the best payroll gain since May ’10 with an amazing gain in the household survey and the internals of the report also look mostly positive. If only Bernanke gave his testimony after today’s report, we’d see whether he would have stuck to the 2014 time frame for zero rates and the possibility of more QE. In terms of market reaction, while today is just one number subject to multiple revisions, we’ll see whether the initial enthusiasm will last if there is less of a possibility of more QE, arguably the main factor keeping this market so levitated over the past few months.

Category: MacroNotes

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8 Responses to “Payroll data a great surprise, do we really need more QE?”

  1. MayorQuimby says:

    Report was what I would call solidly negative.

    Have to look past the headlines and dig a bit. That’s where the truth lies and it isn’t pretty unfortunately.

  2. MayorQuimby says:

    I think it is a long play however…

  3. MayorQuimby says:

    Which turns into a quick heavy short play. Should be interesting.

  4. Greg0658 says:

    yesterday repeat lite version today .. the returning soldiers extended the holiday buying .. the weather events have rebuilding on the move .. expect a mini baby boom right before the election so invest in car seats – right now in gi home games .. but way down the road more laborers in a world the computer chip & the engine is king not muscles sooo (what did I miss) the tax cuts on the middle class helps and the animal spirit to survive some how some way oh & don’t forget PFG “if your an American you have the right to file for” bankrupzy

  5. wally says:

    I don’t think we need more QE… as long as we run a good-sized deficit during a recession we are providing stimulus. If that deficit drops off too soon,though, due to government cutbacks, we’ll prolong the bad times. The time to switch away from deficits will come, but not yet.

  6. Expat says:

    Ben Bernanke is like the captain of the Golgafrincham B Ark. Why get out of the bath when one is really still enjoying it? And so, QE will continue through the fictitious recovery, the bogus plateau, and be increased again when the inevitable bubble bursts on the downside.

    If we assume an apparent solid recovery which runs through the election, will a re-elected Obama administration really want to start jacking up rates to soak up all the trillions that were spewed out since 2001? I think not.

  7. ssc says:

    “Do we need more QE??”

    Kind of think yes.

    I’ve long wondered: how will the close to zero rate (negative yield) treasury bond market respond when there’s some sign of life in the economy. I think we are getting a bit of a clue Friday, the treasury bond market was “walloped” (to quote WSJ), thus some kind of QE, even though Bernie will have other name for it, will be necessary to keep rates somewhat in check.

  8. laturb says:

    A little surprised that you ran with this article, Barry.
    ‘Best payroll gain’, ‘amazing gain in the household survey’, ‘well above expectations’, ‘whopping 847k jobs’…
    Boy, it just made me wanna open the windows, swing the missus around by her legs, light one of my very best Havanna cigars, and yell, IT’S OVER. WE’RE SAVED. BERNANKE IS THE MAN. SPEND, SPEND, SPEND!
    Then I realised that I hadn’t taken my medication, and I had to get a grip on myself.
    Hell, my basement apartment doesn’t have any windows. My wife left me soon after Lehman’s collapse, and as for cigars, well, I already lit both ends in ’07 and boy did I get burnt.
    Rationally, what a load of bunkum from Boockvar! He doesn’t moonlight for the NAR, does he?