Strong Jobs Report, Manufacturing Surprises In January

We’ll touch on several bases today as there is plenty of news to report, including additional good news on the economy over the last couple of weeks. Let’s begin with last Friday’s stronger than expected jobs report for January.

US hiring strengthened in January as more Americans hopped into the labor market, helping rev-up the economy at the start of the year. The Labor Department reported that employers added 225,000 net new jobs last month, well above the pre-report consensus of 156,000 new hires. Over the last three months, new jobs have averaged 211,000 compared with a monthly average of 175,000 for all of last year.

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The headline unemployment rate ticked up to 3.6% from 3.5% in December, but that was due to more people actively looking for work, which is a good thing. The labor force participation rate increased 0.2% to 63.4%, matching its highest level since June 2013. Wages climbed 3.1% from a year earlier, a touch stronger than December’s rise of 3%, to $28.44/hour on average.

Companies looking to hire are drawing from a larger pool of job seekers to fill roles. In January, the share of Americans aged 25 to 54 working or looking for work ticked up to 83.1% from 82.9% in December, the highest rate since 2008. That’s great news!

Solid hiring has been a hallmark of the economic recovery of the past decade. US employers have added to payrolls for 112 straight months, the longest streak of job gains on record (over 9 years). In sum, the January jobs report was clearly stronger than expected and another indicator that the US economic recovery is in fine shape.

US Factories Expanded in January, First Time in Five Months

In what was even better news in my opinion, US factories expanded unexpectedly last month, snapping a five-month losing streak. The Institute for Supply Management (ISM), an association of purchasing managers, reported last week that its manufacturing barometer, the Purchasing Managers Index (PMI), rose to 50.9 in January, up 3.1% from 47.8 in December. Any reading above 50 signals economic expansion, whereas anything below 50 indicates contraction.

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