U.S. hiring came in stronger than expected in January, rebounding from a disappointing December print.
Nonfarm payrolls rose by 225,000 in January, far surpassing Bloomberg’s consensus estimates for a 165,000 gain, according to the jobs report released today by the U.S. Bureau of Labor Statistics. This number may help alleviate some investor unease over December’s somewhat weak reading. We argued at the time that December’s reading likely was due in large part to calendar effects and the volatility of month-to-month changes. We prefer to base our views of the labor market’s vitality on the larger trend, which, has been undeniably strong, as shown in the LPL Chart of the Day.
Some investors have questioned how long hiring can remain elevated before we experience a worker shortage or a sharp rise in wages. The answer, according to this report, is not yet.
In addition to the strong hiring numbers, workers also have enjoyed healthy wage gains. January saw average hourly earnings rise 3.1% year over year, a slight pickup from December, while average hours worked remained unchanged. “Today’s wage number exceeds inflation, meaning workers are growing their purchasing power in real terms and should be able to continue increasing their consumption of goods and services,” said LPL Financial Chief Investment Strategist John Lynch. “But the number is also lower than the 4% threshold that has historically signaled an overheating job market and potential for subsequent economic and market volatility. This is a very encouraging report.”
The one slight blip in today’s release showed the unemployment rate inching 0.1% higher to 3.6%. This was mainly due to changes to the size of the labor force, which affected revisions. Still, given the extremely low unemployment level, the volatility of month-to-month numbers, and the overwhelmingly positive tone of the other data points released today, we feel confident about the prospects for the U.S. consumer to continue powering this economic expansion through 2020 and beyond.
For more of our investment insights, check out our Outlook 2020: Bringing Markets Into Focus.
The opinions voiced in this material are for general information only and are not intended to provide specific advice or recommendations for any individual security. To determine which investment(s) may be appropriate for you, consult your financial professional prior to investing. The economic forecasts set forth in this material may not develop as predicted.
All indexes are unmanaged and cannot be invested into directly. Unmanaged index returns do not reflect fees, expenses, or sales charges. Index performance is not indicative of the performance of any investment. All performance referenced is historical and is no guarantee of future results.
Investing involves risks including possible loss of principal. No investment strategy or risk management technique can guarantee return or eliminate risk in all market environments.
This Research material was prepared by LPL Financial, LLC.
Insurance products are offered through LPL or its licensed affiliates. To the extent you are receiving investment advice from a separately registered independent investment advisor that is not an LPL affiliate, please note LPL makes no representation with respect to such entity
If your advisor is located at a bank or credit union, please note that the bank/credit union is not registered as a broker-dealer or investment advisor. Registered representatives of LPL may also be employees of the bank/credit union. These products and services are being offered through LPL or its affiliates, which are separate entities from, and not affiliates of, the bank/credit union. Securities and insurance offered through LPL or its affiliates are:
|Not Insured by FDIC/NCUA or Any Other Government Agency | Not Bank/Credit Union Guaranteed | Not Bank/Credit Union Deposits or Obligations | May Lose Value|
For Public Use – Tracking # 1-948623