Jobs Stink

The Bureau of Labor Statistics reported that there were only 113k job creations in the month of January. This was much lower than the 181k expected. Adding to the weak report was that last month’s number, originally reported at a measly 74k, was only revised slightly sigher to 75k. Virtually everyone was expecting a much greater revision. There was, however, a big revision in November’s report by 33k, bringing the total up from 241 k to 274k. But, the last two months have been very weak. It’s true that weather may be playing a role, but it doesn’t explain the disconnect from the ADP Employment Report.

The last two months of ADP were 227k and 175k respectively, for a total of 402k. Compare this to the 187k total reported by the BLS. Additionally, there is an even greater disconnect with the Household Survey, which reported a very robust gain of 638k jobs for January. This big increase in the household survey explains why the rate of unemployment dropped from 6.7 to 6.6%, because the unemployment rate is derived from the household survey. It also explains why the labor force participation rate increased from 62.8 to 63%, again being derived from the household survey. So what does this mean? Some people are already claiming that the Fed may pause their tapering of bond buying. We don’t think so at this time. If all the surveys were saying the same thing, and if extreme weather conditions were not a factor, we might feel differently. But for now, we’re convinced that the Fed will continue along its tapering path.

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