Jobs Report Disappoints, As Hype Proves Misguided

The US economy added 49,000 jobs last month, the first nonfarm payrolls report since Joe Biden assumed the presidency showed.

That was less than half of the 105,000 consensus expected, but still marked a reprieve of sorts from December’s dour report, which betrayed the first decline since April’s apocalyptic lockdown purge.

The headline print will likely be viewed as a disappointment. Data out earlier in the week seemed to hint at a better-than-expected report. ADP was an upside surprise, for example, and the employment subindex from the ISM services survey suggested employers were hiring. One of the largest banks on the Street went so far as to suggest, on Wednesday, that NFP could print 700,000. Suffice to say we didn’t quite get there.

The revisions looked sour. November’s headline print was revised down by 72,000, while December went from bad to worse. The US economy lost 227,000 jobs during 2020’s final month, the BLS said Friday. “The annual benchmark process contributed to the November and December revisions,” the government remarked.

The numbers for leisure and hospitality were, unfortunately, quite rough. The sector shed another 61,000 positions last month, and December’s losses look larger than previously reported, at -536,000.

Amusements, gambling, and recreation lost 27,000 jobs, accommodation 18,000, and food services and drinking places another 19,000. Over the past two months, leisure and hospitality has seen 597,000 jobs disappear into the winter COVID wave. Employment in the sector remains 23% lower versus pre-pandemic levels.

Private payrolls missed by a mile, printing just 6,000 versus expectations for 163,000. The US lost 10,000 manufacturing jobs over the survey period. Consensus was looking for a 30,000-job gain. No economist expected a decline.

Average hourly earnings printed an upside beat YoY, rising 5.4%. The MoM gain, at 0.2%, was cooler than expected.

The unemployment rate fell to 6.3%, better than the 6.7% the market was looking for. The participation rate ticked lower.

If anyone was concerned about a “good news is bad news” dynamic (for markets), the underwhelming report should allay those fears. The numbers, on a first read, suggest the US labor market didn’t recover any of the momentum lost late last year.

This should increase the sense of urgency around stimulus. It will likely serve as a talking point for Democrats pushing the envelope on more virus relief.

The January payrolls disappointment came just hours after Senate Democrats endured “vote-a-rama,” a painfully tedious, but ultimately necessary, legislative marathon, clearing the way for a move to bypass Republicans in the budget process.

Kamala Harris cast her first tiebreaking vote at 5:15 AM, allowing Democrats to forge ahead with Biden’s stimulus plan which, if the January jobs report is any indication, is needed.


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3 thoughts on “Jobs Report Disappoints, As Hype Proves Misguided

    1. Agree, and for the US to have any other than a uneven recovery with even greater wealth inequality and greater populist resentment than pre-Covid, the Biden administration is going to have to push through another $XX? BN of spending on things like green energy, infrastructure, health care, education, etc, which will have to be at least partially funded by tax increases as a political reality (I agree with H that its not economically required).

  1. Ya’ll need to go back 60 years to find a lower participation rate, but happily, the 10-Year Treasury Constant Maturity Minus 2-Year Treasury Constant Maturity around then was about the same, before it crashed into the “Reagan recession” [coupled with budget cuts, which were enacted in 1981 but began to take effect only in 1982, led many voters to believe that Reagan was insensitive to the needs of average citizens and favored the wealthy].

    I’m sure it’ll be different this time with Robinhood!

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