January jobs were weaker than expected

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Published Date 2/7/2025

January employment had less job gains than forecasts, +143k against 168K estimates, December jobs revised from 256K to 307K. The unemployment rates declined to 4.0% from 4.1%, private jobs thought to be 140K reported 111K and December revised from 223K to 273K, November’s employment increase was increased to 261,000 from 212,000. Average hourly earnings +0.5%, expected +0.3%, year/year 3.9%; the labor participation rate increased to 62.6% from 62.5%. The number of unemployed people decreased by 37,000 to 6.849 million. The labor force participation rate rose to 62.6%, and the employment-population ratio increased to 60.1%. The key in this report is the decline in the unemployment rate, the reaction in markets that it will add to the Fed’s thinking about less rate cuts and sent the 10 year note back to its pivot point at 4.50% +6 bps, early MBS prices fell 17 bps.

Last August BLS did a preliminary report on jobs with more data available from March 2024 saying actual jobs were 818K less than what was released on the monthly releases, it shocked markets. This morning the final count from BLS revised to 589K.

Minneapolis Fed’s Neel Kashkari said on CNBC this morning the US labor market had cooled but remained solid, and interest rates are likely to decline “modestly” in 2025. “This is still a good labor market,” “the economy is strong, businesses are optimistic.”

At 9:30 am ET the DJIA opened +35 NASDAQ +20, S&P +7. 10 year 4.49% +5 bps. FNMA 6.0 30 year coupon at 9:30 am -16 bps from yesterday’s close and -7 bp from 9:30 am yesterday.

At 10 am the mid-month University of Michigan consumer sentiment index expected at 72.0 from 71.1 in January. Sentiment plunged to 67.8. Overall consumers not so enthusiastic.

Looking ahead, next week inflation data on CPI and PPI.

Source: TBWS

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