The U.S. economy added back 467,000 jobs in January, far better than the consensus, despite the omicron surge. The unemployment rate ticked up to 4%. Stock market futures initially sold off after the jobs report. But stocks strengthened after the opening bell, with the Nasdaq leading the way.
Private-sector payrolls rose 444,000 in January, while government jobs rose 23,000.
Wall Street had expected the January jobs report to show a gain of 150,000 jobs, all in the private sector, with no change in government payrolls. Economists expected the unemployment rate to hold at 3.9%.
Average hourly wage growth of 0.7% in January topped expectations of a 0.5% rise. Annual wage growth rose to 5.7% from December's upwardly revised 4.9%.
Job gains for November and December were revised up by more than 700,000. The initially reported gain of 199,000 jobs in December was revised to 510,000.
Omicron cases hit a peak of about 800,000 cases per day right around the same time the Labor Department conducted its mid-month household and employer surveys. The pace has since been cut in half, and the labor market already appears to be getting stronger. Initial jobless claims spiked to 290,000 in the week through Jan. 15, but fell to 238,000 in the week through Jan. 29.
The surprising strength of the jobs report is a bit hard to explain. While omicron's impact didn't hold back employment, it did result in a 0.3% decline in hours worked across the economy. That's the equivalent of 404,000 fewer workers vs. December, instead of the big reported increase, according to IBD calculations.
Stock Market, Treasury Yields React To Jobs Report
The stock market initially weakened after Friday's jobs report, with tech stocks giving up much of their early gains, but rallied after the opening bell. Just before 10 a.m. ET, the Dow Jones was off 0.2%. But the S&P 500% rose 0.2%, while the Nasdaq climbed 0.7%, with Amazon.com rallying after its Q4 earnings report.
Tech stocks have taken a beating to start the year amid a rise in Treasury yields, with the Nasdaq falling 11.3%. The S&P 500 has lost 6.1%, while the Dow Jones is off 3.4%. Yet the indexes are well off their lows and trying to sustain a fledgling rally.
Be sure to read IBD's The Big Picture column after each trading day to get the latest on the prevailing stock market trend and what it means for your trading decisions.
After Friday's jobs report, the 10-year Treasury yield popped seven basis points to a Covid-era high of 1.9%.
After the jobs data, the CME Group's FedWatch page showed 78% odds of five quarter-point rate hikes this year, up from 65% a day earlier.
Jobs Report Details
The leisure and hospitality sector added 151,000 jobs. Factory employment grew by 13,000.
Construction jobs fell by 5,000. Health care and social assistance payrolls rose 29,000. Retailers added 61,400 jobs.
Unemployment
The household survey, which is used to derive the unemployment rate, showed the ranks of the employed rising by 1.2 million, but that partly reflected new population estimates.
The share of the working age population (age 16 and up) participating in the labor force rose to 62.2%, vs. expectations of 61.8%.
According to the monthly survey of households, 6.5 million Americans are unemployed, down from 23.1 million in April 2020, but up from 5.8 million in February 2020.
Please follow Jed Graham on Twitter @IBD_JGraham for coverage of economic policy and financial markets.
