The all-inclusive unemployment data is data is released at 8:30. What will the data suggest? The statistics have a high hurdle to meet given the large January “beat.” Were the labor markets held back by the weather and the slowdown at the West Coast ports?
In my view there are two major components that most will closely scrutinize; wage growth and the labor participation rate (LPR). January’s data showed the biggest gain in the average hourly earnings since 2008. Are these gains sustainable?
The participation rate was 62.9% in January up from 62.7% in December, a LPR that matched the lowest in decades. Some have trumpeted the multi month consecutive 200,000 plus gains in non-farm payrolls but in my view non-farm payrolls will have to increase by over 300,000 for several months in order to increase the LPR to respectable levels.
Analysts are expecting a 5.6% unemployment rate, a 235K and 225K increase in nonfarm and private sector payrolls. Average hourly earnings are expected to rise by 2.1% with an average hourly workweek of 34.6 hours. The LPR is expected to remain unchanged at 62.9%.
Potentially broad based conclusions can be made from this data.
Last night the foreign markets were mixed. London was down 0.24%, Paris up 0.08% and Frankfurt up 0.15%. Japan was up 1.17% and Hang Sang down 0.12%.
The Dow should open quiet heading for their sixth weekly loss of the year but this could change radically after 8:30. The 10-year is off 1/32 to yield 2.12%.
Ken Engelke
Chief Economic Strategist Managing Director
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