Data Recap

U.S. economy is re-accelerating, and labor is tightening. I don’t usually pat myself on the behind, but nobody called for this except me. Let’s dig in.

-Headline at 258k vs 160k consensus. Previous month pretty close to unrevised.

-Huge drop in unemployment rate to 4.1%. Noone expected that.

-Wages dip back to 0.3 where consensus was.

-Most importantly, private payrolls a huge beat 223k, vs 135k and prior month revised higher to 185k.

Let’s look at the household and establishment reports. HH first.

Nice improvement in employment to pop ratio, and level of unemployed fell. HH catching up to establishment.

Every ethnicity and every education group saw a drop in UR. Notably, the african american segment had a weird 0.7 pop last time that partially reversed. Also note teenagers.

Re-entrants and new entrants both declined. They have been drivers of unemployment. Great sign.

Duration of unemployment fell across all categories.

Part time for economic reasons fell sharply (good sign) and noneconomic rose. The latter is gig economy at work, a major thesis of mine.

Onto establishment breakdown. Construction positive, and will remain so as LA needs to be rebuilt, manufacturing was negative, retail had a huge month in a positive sign for retail sales next week, health care in line with normal prints as was govt and leisure and hosopitality

With immigration slowing to a standstill, this as much a blockbuster report we can get. We are re-heating, the cuts are now clearly a mistake (should be evident with next week’s inflation) and the odds of a hike are not to be faded.