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Spectacular Jobs Report Lifts Dollar, Mid-Year Hike Still Most Likely Scenario

The US employment report was nothing shy of spectacular. Job growth was better than anticipated. Back months were revised higher. Earnings growth recouped the December fluke. The participation rate jumped. It is true that the unemployment rate edged up, and the underemployed also ticked up. Yet, on balance, those who doubted a mid-year Fed hike have to reconsider.

The US created a net new 257k jobs in January, handily beating expectations, and in a month that has historically disappointed the consensus. An additional 147k jobs were added to the November and December reports, which makes its the strongest three months of jobs gains in the US since November 2008.

The focus was also on hourly earnings after last month's disappointment. Hourly earnings jumped 0.5%, and the year-over-year rate rose to 2.2%. It is the best since November 2013. It is still not impressive from a historical point of view, but… Read More …