Today, we have the latest on the job market. Get ready for another very confusing edition of The Line.
353,000 Jobs Added in January
That headline really says it all. Another month with a blow-away jobs number—the Dow Jones estimate was 185,000. Before we dig deeper, here are the other highlights of the report:
The unemployment rate held at 3.7%. It had been expected to tick up to 3.8%.
The largest job gains were in professional and business services (+74,000), and health care (+70,000).
Job gains for November and December were revised up by a total of 126,000.
Average hourly earnings rose 0.6% last month, double the estimate. Wages are up 4.5% over the past year, higher than the 4.1% estimate.
The average number of hours worked fell to 34.1, a sign that wage growth may not be as strong as the hourly earnings data makes it look.
Watching the pundits on TV try to explain this ridiculously high job growth made me realize that nobody really knows what’s going on with the labor market. Maybe it shouldn’t be such a surprise, given that the number of job openings hit a three-month high in December. On the other hand, the ADP private payroll number released on Wednesday came in at just a 107,000 gain in January. We’ve also seen a jump in jobless claims over the past two weeks, but they are still pretty low. There is also the question of whether seasonal adjustments to the data are overstating job gains in the U.S. But that’s for another column.
Add this all up, and you still can’t figure out what’s going on. The good news is you don’t need to know why this is happening, just what it means for you. The economy continues to outperform expectations, which is a good thing for the country and those needing jobs. Unfortunately, most better-than-expected data is bad for the housing market, as mortgage rates—which have come down sharply since the end of October—could be headed higher in the coming weeks. That said, we still expected them to come down this year, but at an uneven pace.