US jobs report crushes, wages disappoint

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The first jobs report of 2017 crushed it.

The US economy added 227,000 jobs in January, above economists’ expectations of 180,000. This extends the record streak of job creation in the US.

However, wages in January rose by just 2.5% year-over-year, below expectations of 2.7%.

The survey reference period is the pay period including the 12th of the month. Therefore, technically, this jobs report looks at numbers from the final days of the Obama administration. At the same time, various sentiment indicators have ticked up in the months after Trump’s election, suggesting that the new president may have influenced these figures.

Additionally, the labor force participation rate ticked up to 62.9% from 62.7%, but is still near the lowest levels in decades. An analysis in August by the President’s Council of Economic Advisers suggested that about half of the decline had come from structural, demographic factors, with the baby boomers starting to retire, while the other from cyclical factors related to the Great Recession.
The unemployment rate ticked up slightly to 4.8%, following the prior month’s reading 4.7%.

Most analysts had been gearing up for a solid jobs report, with consensus expectations for nonfarm payrolls to increase by about 175,000. However, some folks argued the report could surprise on the upside given solid economic data in the past week.

“Data in the past week, however, have introduced some upside risk and thus another 200k+ payroll print cannot be excluded,” wrote a TD Securities US strategy team led by Michael Hanson, chief of US macro strategy, in a note to clients.

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