Are you bullish enough?
It's an appropriate question to ask following last week's jobs report. Prior to Friday's labor market data, jobs growth had been one of the only major economic indicator still in decline. Economic data reported in the last few months, from U.S. GDP to Durable goods, found a bottom around August/September.
With the labor market growing, the sum total of all this evidence is crystal clear. The U.S. economy is accelerating again.
Jobs Growth: Picking up
#JobsReport #Wages
The January jobs report snapped a 23 month streak of declining jobs growth. As you can see in the Chart of the Day below (from today's Early Look), year-over-year non-farm payroll growth (the black line) accelerated to 1.64% versus 1.5% in December.
Within the report, Bloomberg points out that average hourly earnings growth declined to 2.5% (year-over-year) versus 2.8% in December. Digging still deeper into the data quickly reveals Bloomberg's "analysis" misses the mark.
The pink line in the chart below shows "non-supervisory" hourly earnings growth of 2.9%, a new economic cycle high. But who cares about "non-supervisory" workers? And why the distinction? This is the best reading of the American people's earnings growth, since the number represents 80% of all U.S. workers.
The U.S. Economy Is Growing
#Economy #GDP #Inflation
In isolation, the jobs report amounted to a modest improvement. But that matters. Consider it within the context of a broader U.S. data acceleration:
- GDP: Fourth quarter U.S. GDP (year-over-year growth) came in at 1.9%, up from 1.7% in the third quarter (the second consecutive quarter of accelerating growth, since five quarters of decelerating growth to the 1.3% second quarter low.)
- Industrial Production rose to +0.5% recently, breaking a 15-month streak of negative year-over-year growth.
- Durables Ex-Defense & Aircraft (household demand proxy) was +0.9% sequentially for December and improving solidly to +3.6% YoY = 3rd month of positive year-over-year growth
- CPI: Inflation accelerated for a 5th consecutive month, taking consumer price growth to its highest level in 32-months (since May 2014) at +2.1% in December.
- NFIB Small Business Optimism registered its highest print since 2004 at 105.80
Bottom Line
Despite stocks sitting near all-time highs, the acceleration in U.S. jobs growth is yet another sign that the American economy is growing. We'll ask the question again.
Are you bullish enough?
