US Jobs Report for January 2015

Last Friday (February 6, 2015), US jobs report came out better than expected for prior month. Non-farm payrolls increased to 257,000 and the unemployment rose to 5.7% by 0.1% in January. Plus, data for November and December was “lifted”. November was revised from 353,00 to 423,000 (+70,000) and December was revised from 252,000 to 329,000 (+77,000). Over the past 3 months, U.S has created just over 1 million jobs, strongest since 1997. Only a negative side was the unemployment number. Unemployment number increased because labor force increased. The labor force participation rate rose by 0.2% to 62.9%, showing little more confidence in the jobs market. Average hourly earnings increased by 12 cents to $24.75, which took year-on-year gain to 2.2%, largest since August 2014.

Markets reactions to the report. See for yourself. If you have any questions, feel free to leave comments below.

S&P 500 - Hourly
S&P 500 – Hourly
US Dollar - Hourly
US Dollar – Hourly

 

USD/JPY - Hourly
USD/JPY – Hourly

 

Job gains took place in construction, financial activities, health care and manufacturing. It tells me that the economy is growing and businesses are hiring people for new projects. Businesses probably have positive cash flows to start new projects and hire people. Let’s hope that they are not taking debt that cannot be payed back.

When the rise in hourly wages are combined with lower oil prices, what do you get? People tend to have more money in their pockets. They can spend their money in anything such as retail, vacations, etc, which will increase the profits/revenues of the businesses. They can also pay down the debt that they may have such as student loans, mortgages, etc. Financial crisis in 2008 taught a lot of people lesson, to save money for unexpected emergencies. Young people are more likely to spend the money in areas like retail, entertainment and technology. New technologies tend to excite young people, such as drones.

Strong jobs reports increases the chance of interest-rate hike in June or earlier. Federal Reserve might wait for two more reports to get better sense of where economy is going. If FOMC (Federal Open Market Committee) drops “patient” in its next meeting, there will be higher chance of rate hike in June. The US Dollar is already strong. If FOMC drops “patient”, it will be even more stronger, hurting exports.

I believe FOMC should try to weaken US Dollar before raising interest rate. Even more stronger dollar has the power to hurt exports. Sales of international companies in the U.S can decrease due to stronger dollar. If the US Dollar continues to strength, it can effect US economy is negative way. It will slowly spread.

Feel free to leave comments. Thank you.