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    Payroll employment was tepid, though the unemployment rate fell again. Weather in the eastern 1 / 3 of the u.s. Was the second coldest January in the last 30 years. On the bullish side, the mix between full-time to part-time employment growth was favorable.

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    Payroll employment was tepid, though the unemployment rate fell again. Weather in the eastern 1 / 3 of the u.s. Was the second coldest January in the last 30 years. On the bullish side, the mix between full-time to part-time employment growth was favorable.

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    20 views2 pages

    Untitled

    Uploaded by

    api-246821370
    Payroll employment was tepid, though the unemployment rate fell again. Weather in the eastern 1 / 3 of the u.s. Was the second coldest January in the last 30 years. On the bullish side, the mix between full-time to part-time employment growth was favorable.

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    Todays headline payroll employment was another downside surprise.

    Payroll job growth was tepid, though the unemployment rate fell again. The unemployment rate is the lowest rate since October 2008. Weather was a culprit for the muted job gains. Weather in the eastern 1/3 of the U.S. was the second coldest January in the last 30 years. However, construction employment did rebound in January, after tumbling in December. The participation rate rose to 63.0% in January. We estimate some 75% of the drop in the participation rate over the in this business cycle is secular and due to baby boomers. The bulls and bears on the unemployment rate can each find information in the jobs report to support their case. On the bullish side, the mix between full-time to part- time employment growth was favorable. The number of unemployed fell, despite a surge of workers in the labor force and the number of part-time workers for economic reasons fell sharply. On the bearish side, the number of workers outside the labor force but wanting a job rose 237,000. 1Q real GDP growth is probably around 3.0%. We estimate personal income climbed just 0.3% in January and industrial production jumped 0.4%, largely due to utility production. For the capital markets, this morning's report is a bump in the road for the markets outlook that the U.S. economy has probably turned up. As a consequence the 2-yr to 10-yr spread should probably narrow on this news, particularly in the belly of the curve. Credit spreads against the 10-year will probably not move significantly. Furthermore this report is a weight upon cyclical and employment service stocks. That said, the leading components of this report were favorable for strong jobs report over the next three months.

    WeatherDisruptedJobGrowthinDecemberand January.MostofTheWeatherAssociatedDropWill ComeBackintheNextTwoMonths.

    TheUnemploymentRateIsStillTooHighToGenerate AcceleratingEarningsGrowth.

    TheDiffusionIndexFellSharplyinDecember,ButIs StillHigherThanthePrior20022007Expansion.

    ConstructionEmployment,WhichFellinDecember, ReboundedinJanuary.ItShouldPostGoodGainsin theNextTwoMonths.

    AnotherSignofaHealingLaborMarket.

    TheSharpGainsforEmploymentServiceStocks PortendedABetterJobsMarket.ButDecemberand JanuarysJobsReportWillWeighUponTheseStocks inFebruary.

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