January U.S. Employment and Auto Sales

                                      New Jobs and New Cars, What’s Not to Like?

  • The January Payroll Employment Survey showed a solid net gain of 243,000 jobs for the month.
  • The separate Household Survey posted a huge 847,000 job increase for the month.  
  • The Unemployment Rate ticked down to 8.3 percent as the labor force numbers jumped by 508,000.
  • Vehicle Sales for January accelerated to a 14.1 million unit rate.

Job growth in January exceeded expectations with a print of +243,000 payroll jobs for the month, well above the consensus expectations that were sagging going into this morning’s data release. The unemployment rate stepped down from 8.5 to 8.3 percent. This continues the trend of positive economic data for the U.S that began in the fourth quarter of 2011 and now has extended into the first quarter of 2012. Payroll job growth was broad-based. Of note is the strong 50,000 job gain in manufacturing and the 21,000 net new jobs in construction.  Beyond the January numbers, revisions to historical data were positive, adding to the total U.S. job count. The average workweek for all employees was unchanged in January, but the manufacturing workweek increased by 0.3 hours and factory overtime increased by 0.1 hours, consistent with positive news from the auto sector. All in all, a solid jobs report that is supportive of ongoing income and spending growth and improvement in business and consumer sentiment. Already there is speculation about how long the Federal Reserve can hold onto its promise to keep interest rates exceptionally low through the end of 2014. A lot can happen over the next three years, including better than expected labor market conditions. Downside risks remain, particularly from stress in the Euro-zone, but this side of the Atlantic looks better for now.

January auto sales accelerated to a 14.1 million unit pace, up from December’s 13.5 million units. This is a post-recession high if you discount* the temporary surge in sales due to the cash-for-clunkers program in August 2009 (*baseball statisticians like asterisks and so do economists). With more jobs and more new cars on the road, the economy is feeling some lift.

Market Reaction:U.S. equities opened with strong gains. Treasury yields are up. WTI crude is trading at $97.14/barrel. The dollar is up against the yen and the euro.

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