According to the official payrolls report, employment dropped by 20 000 in January, while the consensus was looking for an increase by 15 000. The December figure was downwardly revised from -85 000 to -150 000, while the November figure was upwardly adjusted from +4 000 to +64 000, generally offsetting each other. All revisions taken into account, the payrolls were 40 000 weaker than expected. Looking at the breakdown of the January data, private payrolls fell by 12 000 and government payrolls dropped by 8 000. In goods-producing, employment declined by 60 000 (from -54 000) due to a sharp drop in construction (-75 000 from -32 000), probably a weather-related drop, while manufacturing rose by 11 000 (from -23 000), with payrolls at carmakers especially strong, and mining and logging increased by 4000 (from +1 000). In the service-providing sector, employment rose by 48 000 in January (from -69 000 in December) due to significant increases in retail trade (42 000) and temporary help (52 000). The latter bodes well for overall payrolls forward, as it is now up for six consecutive months. In the past it pointed to expanding overall payrolls, something we suspect will occur from next month onward. The household survey showed a more optimistic picture than the establishment one. The civilian labour force rose from 153.059 million to 153.170 million, but unemployment dropped significantly (from 15.267M to 14.837M). As a consequence, the unemployment rate, which was expected to stay unchanged, dropped from 10.0% to 9.7% in January, suggesting that the peak in unemployment rate may have been passed. Both average weekly hours worked (33.3 from 33.2) and aggregate hours worked (98.2 from 97.9) rose, leading to a increase of the average hourly earnings increased (0.3% M/M), which indicates that American’s incomes are rising, giving them extra money to spend. So to conclude, although the headline figure disappointed slightly, most of details are encouraging. Firms are lengthening the workweek and paying workers slightly more. The downward surprise was based in the construction sector due to bad weather conditions, while the manufacturing sector added jobs for the first time since November 2007, the retail payrolls were solid (albeit maybe due to seasonal less layoffs following less hiring in December) and employment grew also in service-providing sector.


EMU: German industrial production falls sharply in December

German industrial production disappointed in December as it fell by 2.6% M/M, while the consensus was looking for an increase by 0.6% M/M. The details show that weakness was broadly based as manufacturing fell by 2.8% M/M, construction dropped by 2.6% M/M and energy declined by 0.2% M/M. The sharp decline in manufacturing was based in intermediate and capital goods, while consumer goods rose by 1.5% M/M. This outcome raises fears that the German recovery slowed in the fourth quarter.