It was strong Payrolls: no matter that USD ignores it at the moment
February 04, 2019 @ 17:28 UTC
The United States labour market again showed its strength, adding 304K jobs in January, almost twice more than the expected 165K. The market reaction was somewhat blurred due to the softer unemployment rate and wage growth. However, in our opinion, the report has much more signs of strong economic growth.
The unemployment rate in January rose to 4.0% compared with the November lows at 3.7%. But this is due to the growing share of the economically active population: more and more people want to find work, inspired by the continuing of labour market growth. In this context, the growing share of the economically active population, together with employment growth above 200K, is a clear indication of the economic strength.
Wages growth rates did not meet the expectations, but there is no cause for alarm here either. The annual growth rate is an impressive 3.2%. The January data show a decrease only because of the upward revision of December figures. By still, this is one of the highest growth rates since 2009.
Separately, the publication of manufacturing ISM confirmed the strength of the United States positive momentum. Instead of the expected fall to 54.1 (slowdown signal), we saw an increase from 54.3 to 56.6, despite the decline of the price component.
In addition, the growth of construction costs (+0.8%) and weaker than expected inventories growth at wholesale warehouses intensified optimism. All these releases are signs of healthy demand in the United States at the end of last year.
Alexander Kuptsikevich, the FxPro analyst