US Adds 130,000 Jobs in January, Unemployment Rate Falls to 4.3%

Speakers

Enda — Market Analyst / Guest

John — Host

Summary

The US economy added 130,000 jobs in January, significantly beating expectations, while the unemployment rate unexpectedly fell to 4.3%.
A notable pivot occurred in the Manufacturing sector, which added 5,000 jobs, marking a turnaround from the contraction seen throughout the previous year.
Benchmark revisions showed 800,000 fewer jobs than previously reported (better than the feared -900k), but the speaker argues this weakness is already "baked into the cake" for policymakers.
The labor market is being driven entirely by the private sector, as the government sector continues to shed staff.

Trade Ideas

Ticker	Direction	Speaker	Thesis	Time
CAT /DE /INDUSTRIALS	LONG	Enda Curran Senior Economics Reporter, Bloomberg News	"Look at manufacturing, adding, I think it was 5000 jobs. That's a big turnaround from the manufacturing story of last year." The manufacturing sector has been a drag on the economy, but a shift from net job losses to net job creation signals a cyclical bottom. If industrial hiring is inflecting positive, revenue and capex for major industrial machinery and equipment providers will likely follow. LONG. The data suggests the industrial recession may be ending. If the 5,000 number is a statistical anomaly or revised down next month, the "turnaround" thesis collapses.	—
US EQUITIES /S&P 500	LONG	Enda Curran Senior Economics Reporter, Bloomberg News	"It's a very strong number... 130,000 on a month... unemployment rate falling as well... suggests a healthier jobs market [than] a lot of people were expecting." The macro narrative of a crumbling labor market is refuted by this data. With the negative benchmark revisions (-800k) already "baked in" and the current data (January) showing unexpected strength and private sector growth, the "Recession" trade is off the table for now. This supports risk assets. LONG. The economy is stabilizing, supporting corporate earnings. If the Fed interprets "stronger than expected" data as a reason to keep interest rates restrictive for longer, valuation multiples could compress.	—
HEALTH CARE	LONG	Enda Curran Senior Economics Reporter, Bloomberg News	"People will say this narrow breadth here. Most of this is health care." While the speaker notes this as a potential criticism of market breadth, the undeniable data point is that the Health Care sector is the primary engine of job creation. Capital flows and sector strength are concentrated here; betting against the sector adding the most jobs is fighting the trend. LONG. Follow the hiring momentum. Regulatory changes or "narrow breadth" eventually leading to a broader market correction that drags defensive sectors down.	0:48