U.S. January Employment Report: Comments from Christophe Barraud

Christophe Barraud, Chief Economist & Strategist at Market Securities, sent me his analysis concerning the U.S. January employment report:


1/ Despite negative temporary factors (adverse weather conditions, labor disputes at major West ports…), NFP rose 257K in January, well ahead of a consensus of ~230K. There was also a big net upward revision to November-December of 147K that left the three-month average growth at 336K (highest since Nov. 97).  With the latest revisions, the U.S. added 3.12 million jobs in 2014 (an upward revision to the prior estimate of 2.95 million), the best since 1999′s gain of 3.18 million jobs.


2/ Separately, the main event is the sharp rebound of average hourly earnings MoM (strongest increase since Nov. 2008) which pushes the YoY figure (+2.2%) to its highest level since Nov. 2013.


3/ Concerning the “Household Survey”, including the new population in the Current Population Survey (CPS) estimation process, the unemployment rate was estimated at 5.7% (not directly comparable with data for December 2014 or earlier periods) which remains close to the threshold defined by the CBO as the NAIRU (full employment), namely 5.6%.

4/ All in all, it was another very strong report which  downplayed doubts about the current wages’ growth. As a consequence, more than ever, I believe that the Fed remains on track to raise rates in H1 2015, more precisely in June .