Independent Strategy

Macro Matters

January 2022

Independent Strategy Blog: Macro Matters

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.

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