Photo: Bloomberg TV
Today’s jobs report crushed expectations, with 243,000 new jobs in January, against expectations of 140,000 new jobs. The national unemployment rate fell to 8.3 per cent from 8.5 per cent. And previous reports were revised upward.But PIMCO’s Mohamed El-Erian told Bloomberg TV that we need to look beyond the headline numbers:
Today’s is a strong report. We should welcome job creation of 243,000. We should welcome an unemployment rate at 8.3 per cent. The qualifier—and its an important one—is let’s not also forget the numbers outside these headlines. And there are two in particular that I look at.
Long-term unemployment, those who have been unemployed for 27-weeks or longer, that is stuck, stubbornly stuck at 5.5 million again. And second, youth unemployment—unemployment among the 16 – 19 year olds, that is stuck again at 23 per cent. So, we should welcome the headline numbers, they are really good, but we should not lose sight that we have structural issues that are not being dealt with. And that’s going to be the question mark. Is this just a cyclical bounce or can this hand off into a secular bounce which the economy needs?
Earlier, PIMCO’s Bill Gross said this jobs report would lead to a a “risk-on type trade.” El-Erian reiterated that point, saying this was a short-term risk on trade. He said he doesn’t expect the Fed to change its policy stance, and added, “It is a good cyclical story, but the structural and secular story remains worrisome.”
Watch the entire interview at Bloomberg TV:
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