That Jobs Report -- February 2, 2024

Locator: 46728JOBS.

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.