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January Jobs Report & a Look Ahead for 2018

Jobs Report

It has been quite the eventful week to round off the first trading month of the year – a market selloff, the first State of the Union address from President Trump, the last FOMC meeting for Janet Yellen and now the first jobs report of 2018.

According to payroll processor ADP, businesses added 234K new jobs in January beating expectations of 190K additions. Experts project that nonfarm payrolls will tally roughly 188K gains and the unemployment rate to remain at 4.1%. The robust start to January comes on the heels of a less than stellar ending to 2017 with only 148K new additions in December.

While the Fed did not raise its benchmark interest rate to kick off 2018, it is widely expected to bump rates three times throughout the year with the first coming in March. Investors will pay close attention to the coming job reports as continued job market growth will fan the flames for additional rate hikes throughout the year.

As interest rates continue to rise, so too does the appetite for Wall Street to invest into bonds. Naturally, if the investing paradigm shifts from the stock market to bonds the bears could be on their way out of hibernation.

However, looking ahead, we could very well see the hot labor market cool down in the coming months. According to the Labor Department, average monthly payroll growth has slowed losing about 24% since 2015. As the pool of qualified workers continues to shrink, we could see that number fall in tandem.

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