U.S. business added 246K new jobs in January, shattering economists’ expectations of 168K. Due to the large discrepancy in expected job growth, Friday’s private sector jobs expectations now lie in a wide range of 140K – 190k.
Heading into 2017, experts predict that the average monthly job growth will hover around 160K. Down 20K/month last year, and a far cry from the average monthly gain in 2015 at 229K. This reduction in monthly job growth does not indicate a struggling labor market, rather it points to a robust economy as employers have a continuous shrinking pool of qualified job candidates. Further, an unemployment rate forecasted to hold steady at 4.7% is another indication of the strength of the current labor market. This is just off the 4.6% posted in December 2016, a 9-year low.
One interesting thing to watch will be the change in focus of traders now that growth is stable and lower. Wage metrics, like average hourly earnings may come to the forefront as a measuring stick for future reports. Prior growth was .4%, and the current consensus range is another .2-.4% increase M/M.
Traders planning to trade news events, such as Employment Reports, should be prepared for possible increased volatility and have a plan in place to minimize risk.
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