U.S. Nonfarm Payrolls were released this morning. 517K new jobs were added compared to the estimate of 185K. This is a beat that the market does not want to see.
As we mentioned in yesterday's newsletter, the only thing that can get financial markets to stop thinking a pivot is near is either recessionary data that indicates we won't achieve a soft landing or inflation data coming in hot again. Nonfarm payrolls increasing by 500K+ and the unemployment rate decreasing to 3.4% is the opposite of recessionary data.
As the older population continues to leave the workforce coupled with net immigration continuing to trend lower since 2016, the labor market is still tight as ever. With fewer people that are ready/willing/able to work, individuals losing jobs are still able to find replacements relatively easily in the current environment.
As unemployment remains low, consumer demand will likely remain high. Perhaps this is the soft landing that we thought the Fed would never be able to execute.
With continual job growth and inflation slowly coming down, strong economic numbers will be something that everyone, including the Fed and Wall Street, may want to see again. Will good news finally be good news? Judging by the reaction of the market, that may be the case, with crypto and equities moving higher already after a slight dip this morning.
The next number to watch is US CPI on Feb 14th.
- purplepill
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