The non-farm payroll report showed that the economy continued to shed jobs in January, with 20K more workers cut. Expectations had been for a flat reading. Adding to that weaker-than-expected figure was a rather large downward revision to December’s figure were 150K jobs were lost compared to the originally reported 85K. However, November’s figure was revised to show a 64K gain in jobs from a previous reading that only 4K jobs were added. In January, employment fell in construction, transportation and warehousing, while retail trade and temporary help services added jobs.
Despite the negative headline figure, the unemployment rate, which is conducted using a different survey, fell down to 9.7% during the month from an unrevised 10% in December. The underemployment rate, which includes those workers that are currently not looking for work though they have done so recently, fell to 16.5% from 17.3%. The Labor Department conducted its annual benchmark revision to its survey for the full 2009 period and it showed that job losses were almost 600K more than previously reported.
All in all, the report should not sway the Federal Reserve’s view that US interest rates must remain at a record low for several. Inflation remains subdued and the labor market’s performance is likely to be the main driver of Fed decisions this year.
The reaction to today’s report in the currency markets was rather muted, though the greenback was weaker in the immediate aftermath against the Euro and Aussie, while slightly higher against the Yen.