US: Stronger than ever jobs report - ING

James Knightley, chief international economist at ING, points out that the US jobs report painted another strong picture of the labour market as the non-farm payrolls surged by 304,000 in January.

Key Quotes

“This was above even the most optimistic forecast in the Bloomberg survey and suggests that the US economy is in great shape with businesses desperate for workers. Admittedly some of this strength stems from a 90,000 downward revision to December 2018’s initially reported payrolls figure, but it suggests that the US economy hasn’t been adversly impacted by the government shutdown in any meaningful way.”

“Pay was a little disappointing, rising just 0.1% month-on-month – the weakest growth rate since February last year and below the 0.3% consensus – which seems odd given the fact other surveys suggest businesses are struggling to hire workers and pay is going up.”

“The annual rate of wage growth is still 3.2% year-on-year, in line with expectations, and if we get a 0.3% MoM reading next month, annual wage growth could hit 3.5%. Wage growth for production and non-supervisory workers is already there.”

“The worker participation rate rose to 63.2%, which is the highest reading since August 2013. As such, the fact that the unemployment rate rose to 4% shouldn’t be too much of a concern. Firms clearly need workers and this increase in labour supply will be absorbed as long as they have the right skills.”