Private payrolls in the US rebounded in January, beating expectations by a wide margin and minimizing concern that the economy is stumbling, according to this morning’s release from the Labor Department. Companies added 206,000 workers–a solid improvement over December’s 142,000 gain in the private sector. The 1-year trend edged down last month, near the lowest pace since the recession ended. But for now it appears that the worst you can say about jobs creation is that the annual comparison is easing at a gradual rate that still leaves plenty of room for macro optimism in the near term.
Payrolls increased 1.47% last month vs. the year-earlier level, fractionally below December’s 1.51% gain. Rounding to one decimal point, however, suggests that the moderate trend in employment growth is effectively stable.
“This is a steady as she goes number,” says Subadra Rajappa, Societe Generale head of US rates strategy. “Broadly speaking, this doesn’t really change the outlook on employment.”
Today’s data strengthens the view that the US economy is stabilizing, and perhaps picking up a bit of speed after last year’s downshift in growth. In fact, The Capital Spectator’s business cycle analysis has been projecting just that for several months. In January, for example, we wrote that near-term estimates of the macro trend showed signs of a modest rebound. A similar analysis prevailed in December.
It’s still unclear if US economic growth is also picking up. There’s also the caveat du jour with today’s numbers: unseasonably mild weather provided a temporary boost to payrolls that will fade.
Perhaps, but today’s employment data for now at least strengthens the expectation that the roughly 2% expansion in GDP in the fourth-quarter will hold in this year’s Q1 profile.
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