Independent Strategy

Macro Matters

A deeper look at data

Independent Strategy Blog: Macro Matters

Macro Matters is the Independent Strategy high frequency research area.  We aim to try and offer a glimpse into our analytical process by making available some of the files and data we use to analyse macro developments and financial markets.  It also includes some supplemental weekly technical analysis, which helps us measure shifts in sentiment and bigger changes in trends, complementing the work we do on the macro side. If you’d like to discuss anything in more detail, please reach out.

Non-Farm Payrolls remain on a positive run with a further 678k jobs (mkt 400k) added during February, from a revised 481k in Jan.  Private sector jobs growth came in at 654k (mkt 378k).  Manufacturing payrolls added 36k (mkt 23k) jobs while government gained 24k from an upwardly revised 33k last month.  Average monthly revision over the past 12-months now stand at +79.6k.  There was also good news on the participation rate too which moved up to 62.3% from 62.2%.  Unemployment resumed its downward course at 3.8% from 4.0% although U-6 edged back to 7.2% from 7.1%.  Full-time work continues to drive the recovery, with the household survey actually reporting a small decline in part-time employment.


10th February, 2022 » Macro Data – US January CPI

Another upside surprise to US inflation in January, headline CPI hitting 7.5% y/y (mkt 7.3%) from 7.0% in December.  Core meanwhile rose to 6.0% y/y from 5.5% (mkt 5.9%).  This is bad news for the Fed.  Not simply because the level of inflation is so far beyond the target, they still have base effects to lean on later in the year which will draw the headline rate lower.  Indeed, we’re pretty close, if not at, the peak of the actual headline readings.  The worry is the breadth of the pressure we are now seeing.

Following the surprise contraction in January ADP on Wednesday (-301k), expectations for Non-Farm Payrolls had been pared back.  So the strong is clearly a positive shock with headline NFP +467k (mkt 150k) from an upwardly revised 311k in December.  Private sector jobs growth came in at 444k (mkt 150k).  Manufacturing payrolls added 13k (mkt 25k) jobs while government gained 23k from an upwardly revised gain of 7k last month.  The patterns of strong upward revisions continue and the average monthly revision over the past 12-months now stand at +111k, the highest we’ve seen so far in this recovery.

The Omicron drag is still clearly present but the Google activity data through to 16th January paints a more encouraging picture than some had feared as this wave began in late November/early December.  Indeed, the mildness of the disease, alongside its rapid spread seems to have front loaded the hit to activity, which bodes well for a continuing recovery over the next few weeks.

Another weaker than expected headline non-farm payrolls number, with the report stating 199k new jobs were created during the month versus the 400k median guess.  Private sector jobs growth came in at 211k (mkt 365k).  Manufacturing payrolls added 26k (mkt 35k) jobs while government lost another 12k, their fifth consecutive decline.  The revisions however remain upward, with 156k added in October and November compared to the initial release and the average revision over the past year hitting 79.3k.  There was better news on the participation rate, which was revised up to 61.9% and held steady in December.  That underpinned the further decline in the unemployment rate, U3 falling to 3.9% from 4.2% and U6 to 7.3% from 7.7%.  The average work week was stable at 34.7hrs, which is another positive, full-time employment growing while part-time dipped again.

Google activity data has been updated through to the 3rd January 2022 giving us a complete picture as to what happened over the holiday period.  A large drawdown in activity was expected given the lengthy closures we see at this time of year, but the rapid spread of Omicron has added a further dimension to this more normal seasonality.  And the impact of that looks pretty severe.

Google activity data has been updated through to the 12th December and while there hasn’t been any significant reversal, there look to be some signs at the margin that Omicron is starting to drag.  This comes from both the impact the strain is having on case numbers and confidence as well as the impact of more precautionary restrictions are having on activity to try and slow the spread.


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