Independent Strategy

Macro Matters

February 2022

Independent Strategy Blog: Macro Matters
US

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.

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