Jobs -- February 2, 2023

Locator: 46715JOBS.

Updates

Later, 10:55 p.m. CT: link here.

From the linked article:

Forget Rorschach. Economic statistics, and the interpretation thereof, probably reveal more about your psyche than any inkblot ever could.

A good example is the latest employment report for January, released Friday morning.

The numbers were a blowout, with nonfarm payrolls expanding by 353,000, twice what economists had forecast, while average hourly earnings jumped by 0.6% in the month and 4.5% from a year ago.

Revisions to the two preceding months’ payrolls added another 126,000. Meanwhile, the separate survey of households showed that the unemployment rate held at 3.7%, extending the sub-4% jobless-rate streak going back to December 2021.

All of which confirms that, notwithstanding the popular perception that the economy is weak, the data say the opposite.

Lies, damned lies, and statistics, to cite the quote attributed to Mark Twain.

And throw in seasonal adjustments as further obfuscation, according to the critics who exhort those on their social-media feeds “to do your own research.”

Before seasonal adjustment, payrolls plunged by over 2.6 million in January, don’t you know! Actually, this happens every January, and last month’s unadjusted drop was the smallest since 2012, excepting 2021 and 2023, Jefferies economist Thomas Simons points out in a research note. And the latest seasonal-adjustment factor added fewer jobs than any January since 2014. If last year’s seasonal adjustment had been applied to the latest number, the headline nonfarm payrolls gain would have been 496,000, he added.

The biggest nit to pick in the January jobs report was the sharp decline in the workweek, of 0.2 hours, to 34.1 hours, the lowest outside of recessions. But as J.P. Morgan Chief U.S. Economist Michael Feroli explained in a client note, the shorter workweek appears linked to the jump in average hourly earnings. Bad weather apparently cut the number of hours worked, which meant salaried workers saw an arithmetic boost to hourly earnings.

“While today’s report contained more than the usual amount of noise, the overall picture looks to be one of a still quite strong labor market, and an economy starting 2024 with plenty of momentum,” he concluded.

On that score, the Federal Reserve Bank of Atlanta’s GDPNow estimate for first-quarter gross domestic product is running at a 4.2% annual pace.

Original Post 

USUAL DISCLAIMERS APPLY. THIS WAS DONE QUICKLY, ON THE FLY. THERE WILL BY CONTENT AND TYPOGRAPHICAL ERRORS. DATA DYNAMIC. 

Link here.

• biggest since January 2023; and, you know, this -- January 2023 -- was coming out of the pandemic
  
• 353K vs 185 K; 100,000 over the top estimate; 
  
• prior: 216,000
  
• even the craziest estimate was out to 283,000
  
• can't wait to hear Steve Liesman
• unemployment rate: 3.7% -- better than expected
  
• average hourly earnings: huge jump up six-tenths of a percent vs three-tenths estimate
• average hourly earnings: doubled the estimate
  
• y/y popping: 4.5%
• looks like the Fed saw this coming
• U-6 from 7.6 to 7.2
• labor participation rate: 62.5%
  
• interest rates popping
• strength, surprises

Unemployment: Table A-15:   

Steve:

• massive revision to December, an increase
• likewise an upward revision in November
• seasonal adjustment -- 
• JPow knew this was coming
• overall comments -- really said nothing -- report confusing
  

Jim Cramer et al:

• jobs: far higher than expected
• absolutely excited about Apple
• Cramer: only one with an exclusive with Tim Cook on the morning the AVP was introduced 
• the AVP has 5,000 patents on parts and product
• META: superlatives don't quit
• Mark Z: re-organized an entire company in three months
• dividend and buyback
• AMZN
• game-changer for retail shopping; first-time ever
• cut out 25 cents per package; that was the operating leverage
  

Others:

• the numbers were revised in November and December and those weren't seasonal
• weekly hours down
• dollars / hour up; hour / week down: a wash
• Biden continues to create more jobs than any previous president
• household: - 31 
• now, backtracking: not due to seasonals
• "March cut" off the table
• "June cut" likely off the table
• Goldilocks economy
• consumer spending way better than expected: look at Amazon yesterday
• the economy is going to do very well this year
• "everyone is working"; "everyone" is making money; wage growth continues

Former New Orleans mayor: Marc Morial

• this report beat every economist's expectation
• no one expected this
• couldn't come up with enough superlatives: "a powerful economy"
  
• the Achilles heel? Housing.

Inflation?

• this is the meme: continued wage growth --> inflation
• 500 farm hands to weed, feed, and harvest a 160-acre spread
• every dollar-an-hour increase in wages = $500/hour increase in owner's expenses
• farmer-owner buys one tractor and attachments:
• fires 500 farm hands
• buys neighbor's 160-acre spread
• today's world: Amazon laying off hundreds (thousands?) of $300K/year corporate desk dwellers and engineers
• another example: META (numbers below need to be fact-checked)
  
• one year ago, 88,000 employees
• one year later, today, 68,000 employees
• profit triples
• profit per employee triples 

Market response: by noon the jobs report will be all but forgotten.

• Dow plummets. 
• NASDAQ holds, but dropped a bit.

Wow, wow, wow -- when I see the market's response, all I can do is shake my head -- folks think this is the Holy Grail:

How many hundreds of thousands of new jobs = a 25-basis point cut? For earnings, not market action.

• Wow, talking heads are nuts. Meme investing.
• let's opine:
• 100,000 new jobs = a 25-basis point cut for earnings
• 3.5 x 25 = 87.5 basis points
  

How much of a drop in oil price = a 25-basis point cut? For earnings, not market action.

• let's opine:
• every $2.5 drop in WTI = 25-basis point
• $80 - $7.5 = $72.5-WTI = another 75-basis point

Marketing: look at all the product placement.

• some tech company advertising on CNBC features Gerber baby food but the most prominent product featured: the Apple laptop!