On the January Jobs Report

Today’s 304,000 net payrolls were a big beat, that can’t be explained away by revisions to prior months. But with the shutdown, the weather, benchmark revisions and changes in seasonal adjustment factors, there’s as much noise as signal in these numbers. The uptick in the unemployment rate might be explained by mis-reporting of furloughed federal workers. And some payroll gains might be explained by lower-than-average unemployment due to weather, following four month of greater-than-average. Weak average hourly earnings only confirm the “patience” of the newly dovish Powell Fed. At least directionally, this all validates that the economy has been robust to the several large risk factors that emerged in the fourth quarter, and is good position as those factors continue to ameliorate as they have in January.