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**MNI 5 THINGS: US January Payrolls +304k; Unemp Rate 4.0%>

--5 Things We Learned From The January Employment Data
By Kevin Kastner, Shikha Dave and Harrison Clarke
     WASHINGTON (MNI) - The following are the key points from the 
January employment report released by the Bureau of Labor Statistics 
     - The January employment data were extremely strong and followed a 
downward revision to December that still left a solid level. Payrolls 
growth was much stronger than expected with a 304,000 gain following a 
downward revision to December's gain to 222,000 (prev 312,000), while 
the unemployment rate rose slightly to 4.0% from 3.9% and hourly 
earnings rose 0.1% after an unrevised 0.4% gain in December. Average 
hours held steady at 34.5. 
     - The nonfarm payrolls gain was much larger than the 167,000 gain 
expected. The whisper number was for a 191,000 gain, so payrolls far 
exceeded market expectations for the second month in a row. Private 
payrolls rose 296,000, compared with a 175,000 gain expected, on solid 
gains in construction, education and health services, leisure and 
hospitality, and retail, as well as smaller gains in many other 
categories. Government payrolls rose by 8,000 in the month, with Federal 
Government payrolls up 1,000. The BLS had already announced that 
these workers would be categorized as employed due to the expectation 
they would receive backpay.  
     - The labor force participation rate rose 0.1pp to 63.2% in 
January. The labor force fell 11,000, with household employment down 
251,000 and unemployed up by 241. The U-6 unemployment rate rose by 
0.5pp to 8.1%. The furloughed government workers were considered as 
"unemployed on temporary layoff" and totaled 937,000 this month, up from 
762,000 in December. This impact should reverse in the February data, as 
the next date for a government shutdown to begin, Feb. 15, would still 
allow these workers to be at work during the entire survey week. 
     - Hourly earnings rose 0.1% (+0.109%) m/m after December was 
unrevised from +0.4% (+0.365). Analysts had expected a 0.2% gain, while 
markets had expected a 0.5% increase, so both will be disappointed. 
Hourly earnings now stand up 3.2% y/y. The annual pace of wage growth 
remains ahead of core inflation growth and should rise further as the 
labor market remains tight. 
     - The impact of shutdown and the release of annual benchmark 
revisions makes this month's data a bit noisy, the bottom line is that 
the employment data remain very strong and remain a key argument against 
immediate FOMC policy easing.
     ** MNI Washington Bureau: 202-371-2121 ** 

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