I am actually not going to spend a lot of time talking about the numbers today, as I have made most of my points multiple times. I am also on my way back from the West Coast and am writing this in Sky Harbor airport, which will constrain my time.
The jobs number for January came in at 157,000, in line with expectations, but the previous two months were revised upward by a combined 127,000. This means that, in the fourth quarter of last year, jobs increased an average of 201,000 per month—a very healthy rate. Further revisions were made to the results from earlier in the year, which made 2012 look even better. I have made the point that job growth may be starting to accelerate, based on the average hours worked, and this data supports that.
The uptick in the unemployment rate to 7.9 percent detracts somewhat from the strength of the jobs results, but the stability of the underemployment rate—a better indicator— suggests that the overall change is small and may be due to more people choosing to look for work. The details also looked healthy, with hours worked holding steady and wages growing, although a bit more slowly.
The other interesting data point was the University of Michigan Survey of Consumer Confidence Sentiment, which went up. This contrasts with the Conference Board Consumer Confidence Index® number, which was down, a drop attributed to the tax increase that took effect on January 1. The conflicting data suggest that the tax increase may have less of a negative effect after all.
Stocks are responding positively, as they should. But one thing to be aware of is that, even as higher income supports more consumer spending, wage increases can negatively impact corporate profitability. Very good news for the real economy, and good—though not totally good—news for the stock market.
I have to board a plane—middle seat, lucky me—so have a good weekend!