Independent Strategy


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.

Google activity data through to 5 December continues to paint a solid picture of the recovery, with no sign that the appearance of the Omicron variant is restraining either mobility or economic activity.  Most of our sample saw improvements week-on-week, led by US activity which reverted to trend post-Thanksgiving.  Only Russia and South Korea saw a dip, moving our total global measure back to its highs.

A surprisingly soft November non-farm payrolls report, but the devil is in the detail.  Non-farm employment rose 210k (mkt 550k) while private sector jobs growth came in at just 235k (mkt 530k).  Manufacturing payrolls added 31k jobs while government lost another 25k, their fourth consecutive decline.  The revisions upward at least, but not quite at the pace of the past 12-months.

Google mobility figures through to 28th October looked solid.  While we’ve seen rising Covid cases in Europe the impact on mobility and economic activity has been fairly well contained to date.  Indeed, Germany, France and Spain recorded improvements week on week while Italy saw a very mild dip.  The largest drop was recorded in the US but this is merely an effect of the Thanksgiving holiday which are not adjusted for in the raw data.  The drop was comparable to the decline we saw in this period last year. EMs all looking good.

The Google mobility data, through to 7th October, suggests activity has taken a bit of a stumble, with only two of our sample group (the UK and Australia) showing any improvement over the past week.  The standout decliner was again Russia again, which is in something of a localised freefall at the moment.  But we’d downplay the weakness seen in the rest of Europe, the last week of October being a seasonal weak spot due to mid-term school breaks (note the data is not adjusted) and, like the UK the week before, we should see a bounce in the next update.  If we don’t then worry, but not until then.

October has delivered a more robust payrolls report, non-farm employment rising 531k (mkt 450k) while private sector jobs growth hit 604k (mkt 400k).  Manufacturing payrolls were particularly strong, with a 60k gain while government jobs dropped for a third consecutive month, -73k.  The revisions were also strong (September revised up from 194k to 312k and August was also revised higher.  The average monthly revision is now running at 68k for the past 12-months.

The updated Google activity data, through to 31st October, remains encouraging. Bar Russia the picture improved across our pool versus the prior week with Mexico, Germany and India leading the pack. In terms of the breakdowns we saw a solid increase in economic activity, while mobility dipped or was flat. This was particularly visible in Europe and is partly seasonal with mid-term school breaks leading to a dip in mobility in some places. EM trends seem to be generally better than DMs, bar Russia. That is partially due to the persistent stagnation in the US indices, which damper the overall DM storm, Europe and DM Asia all looking solid.

The updated Google activity data, through to 9th October, continues to paint a picture of general resilience.  Even in places like the UK, which have been subjected to disruptions (specifically fuel shortages) have held up, with barely a blip in the mobility numbers nor overall economic activity.  Indeed, the biggest decliner across Europe over the past week has been Germany, and really that is relatively mild and comes off very strong levels.  Italy, Spain and France all ticked down too.  At the top end of the scale we saw further improvements in EMs, led by India and Brazil while Japan also continues to recover from its summer soft patch.  The US is as ever static, having been that way since late spring really.

We’ve seen a further deceleration in the pace of employment growth, the September non-farm payrolls report showing just 194k jobs were created in the month, down from an upwardly revised 366k in August and well below the consensus guess of 500k.  Despite the glut of job openings there was a further decline in the participation rate too, down 0.1% pts to 61.6%, which is unchanged from a year ago.  That contributed to another steep fall in the unemployment rate, U3 down to 4.8% from 5.2% and U6 to 8.5% from 8.8%.

Google activity data through to 25th September looking a little softer.  There are some tentative signs that economic activity is starting to slow in certain places, although by and large it’s outperforming mobility by a margin.  Europe was broadly softer compared to the prior period, with the exception of the UK, which was actually up a little bit.  But don’t expect that to last amid fuel disruptions which will enter the data next week.

Google activity data through to 17th remains positive, with none of the anxiety present in markets transmitting into the real economy while all the fuss about the Delta variant also seem to be having minimal impact in the real world – a function of the hugely successful vaccine programmes that continues to rollout globally and has reached effectively full coverage in nearly all of the major economies.

Google activity data through to 10th September shows a continuing pick-up in activity, underpinned by a continuing rise in mobility.  Again, leading the drive higher has been Europe, notably Germany and Spain, but France, Italy and the UK also registered decent improvements.  The bounce over the last couple of weeks is really a function of the ending of the summer holidays and start of the new school year.  But economic activity is also looking fairly solid too.

Labour market growth slowed a little more than expected in August, amid some disruption to the services recovery from the Delta strain.  But there were still +235k jobs added (mkt +750k) and we saw upward revisions to prior months, so the net impact was still positive, leading to a further decline in the unemployment rate to 5.2% from 5.4% and the U6 rate dropped down to 8.8% from 9.2%.  The participation unchanged at 61.7%.  Govt payrolls shrank a little after recent strong gains (-8k) but manufacturing continued to grow (+37k).  Weekly hours were 34.7 from a downward pay revised 34.7, which by itself remains elevated from its pre-pandemic range.


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