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Stronger Jobs at 227K, Unemployment Ticks Up to 4.8%

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Friday, February 3, 2017

Ahead of the opening bell this Friday, new non-farm payroll jobs numbers were released from the Bureau of Labor Statistics (BLS), with 227K new jobs created in the month of January, up from the consensus 174K expected from analysts. The unemployment rate rose a tenth of a percentage point to 4.8%, due to an increase in labor force participation.

Average hourly earnings did rise again, but only by 0.1%. This figure year over year is +2.5%. Is it keeping up with inflation? Just barely. Look for this metric to continually increase in importance as these monthly jobs numbers become more clearly representative of the Trump administration.

Revisions to the past two months were rather considerable: +1000 jobs in December to 157K, but down 40K in November to 164K, an overall revision of -39K new jobs over the past quarter year.

Industry by industry, Retail brought in the highest number of new hires at 46K, followed by Construction at 36K. Government hiring was the biggest loser, -10K, marking the second straight decline in government employment. The labor force participation rate rose to 62.9%, up 0.2%. The U6 read — sometimes referred to as “real unemployment” — rose to 9.4% after several months in a row lower.

The Trump administration talks a lot about bringing in lots of news jobs, but we’re looking a little tight in the U.S. labor force these days. For sure there are plenty of Uber drivers who’d rather be employed full-time elsewhere (not to pick on Uber, but to use them as a modern example of American labor), and it is encouraging that more out-of-work citizens have begun to seek out new employment once again. But skill-sets matching job openings looks to be one of the biggest concerns.

We’ve seen a lot of executive orders from Trump so far in the early days of his administration, but nothing yet on his promised infrastructure program (which will presumably include building a big wall on our southern border, but may also include repairing bridges, airports, etc. throughout the country). These jobs ought to be forthcoming, but it’s tough for analysts to include in their models at this point. How much money will Congress allot to such ends? No one really knows at this stage.

A shortage of skilled labor in the Construction sector is something that the administration and Congress may wish to address in bringing new funds to blue-collar America’s workforce. But will it? Another unknown at this point.

Hershey (HSY - Free Report) and Clorox (CLX - Free Report) both beat earnings ahead of the bell today. This follows Amazon’s (AMZN - Free Report) earnings beat after the closing bell Thursday, in which the online retail giant missed revenue estimates for the quarter.

Pre-market trading is up following the BLS report: S&P +10 points, the Dow +90 and Nasdaq +17. The 10-year bond is flat day-over-day at just under 2.5%.

Mark Vickery
Senior Editor

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