Total nonfarm payroll employment rose by 143,000 in January, and the unemployment rate edged down to 4.0 percent, the U.S. Bureau of Labor Statistics reported today. Job gains occurred in health care, retail trade, and social assistance. Employment declined in the mining, quarrying, and oil and gas extraction industry.
Remember, this was before Trump's inauguration, so any impact from there forward is not in these numbers. But also, as a serious confounder, is the "rebase" that occurs on the non-institutional working population every January. And boy was that a whopper this time around, alleging more than three million not-counted people over the last 12 months were in fact present.
This has several impacts in the figures -- for one, it directly reduces the employment-population ratio, which means the previous ratios were wrong -- and looked better than they really were. This is extremely important because of all the data in the labor report that is the single figure that tells you more about how sustainable the government's taxing and revenue structure is than anything else. It was not just wrong, it was wildly inaccurate.
It also moves the unadjusted unemployment rate massively as well -- six full ticks from 3.8% to 4.4%.
But more to the point in addition to all that hours worked went down a tick and that directly resulted in negative changes in weekly check sizes across most of the subgroups in the report.
I won't bother ascribing motive; that's speculation and not the remit of this particular monthly column. But this is a weak report both on its face and internally and in addition the UM consumer sentiment report was released which showed a full percentage point jump in inflation expectations in one month. Unless my data set is wrong somewhere that has only happened once before -- simply put, people are expecting serious inflationary pressures in the economy -- and it is precisely that event that The Fed fears when attempting to provide "monetary stimulus" -- a disorderly change in perception of inflation over time.
Well, there it is, and this complicates the picture mightily on a forward basis.
PS: Don't expect more rate cuts.... not with this sort of set of reports.