• US Non-farm Payroll Employment Rose 353k in January

• Unemployment rate remained at 3.7%

• Average hourly earnings increased by 0.6% MoM, 4.5% YoY

• Labor force participation unchanged at 62.5%

• Fed will still to cut rates, but nothing before May

Hiring picked up sharply in January as employers added a booming 353,000 jobs, highlighting a labor market that continues to defy high interest rates and household financial strains. The performance was not a one-month blip as the change in total nonfarm payroll employment for November was revised up by 9,000, from 173,000 to 182,000, and the change for December was revised up by 117,000, from 216,000 to 333,000. With these revisions, employment in November and December combined is 126,000 higher than previously reported. What’s more, revisions point to stronger momentum in hiring through the end of last year; payrolls in the fourth quarter of 2023 are now reported to have grown an average of 203,000 compared to 165,000 prior to January’s report.

In addition to the solid number of jobs added, employment gains broadened across industries in January. The surprisingly strong showing was driven by big payroll increases in health care and professional services but was also boosted by some quirky factors linked to holiday hiring that may not persist in the coming months. Private payrolls rose by 317k – slightly higher than the 278k reported in December. Gains in the service sector (+289k) were widespread, with health care & education (+112k), professional & business services (+74k) and retail trade (+45k) seeing the strongest gains. Goods-producing industries (+28k) also had a solid month, with hiring in both construction (+11k) and manufacturing (+23k) recording gains. Government added 36k jobs.

Unemployment rate was unchanged at 3.7%. Labor force participation rate was also unchanged at 62.5%. Average hourly earnings grew 0.6% MoM, while annual hourly earnings growth also accelerated from 4.4% YoY to 4.5% YoY.

Source: BIMB Securities Research - 5 Feb 2024