On the January Jobs Report

A blockbuster with 353,000 net new payrolls on top of large upward revisions. The annual benchmark process has upgraded payroll employment by 115,000 at December. Monthly change-figures were revised higher in nine of twelve months, demolishing the narrative that persistent downward revisions showed labor market weakness. The “household survey” reported employment falling by 31,000. But properly accounting for annual adjustments to population controls that make January-over-December comparisons otherwise impossible, employment actually grew by 239,000 – ratifying the payroll number. Average hourly earnings grew 0.55%, the fastest rate in 22 months, on top of a large upward revision to December’s already hot number. With this, the market-implied probability of a March FOMC rate cut has fallen to 23%. There will be two CPI reports before then, both disinflationary or downright deflationary. We will take the over on that probability.