January Jobs Data: Slightly Soft or Oh, So Sweet?

This morning investors are trying to figure out what today’s jobs report means for the economy and interest rates. According to the U.S. Labor Department, employers added only 111,000 jobs last month, below the 150,000 that had been expected. The reports also says our nation’s unemployment rate reached 4.6%, that’s a four-month high. Does the report signal weakness, or is there more here than meets the eye?

"I think the numbers were pretty good for the month considering the possibilities of weather related distortions.” said Steven Wieting, Director of Economic and Market analysis with Citigroup. He says snow in parts of the West stalled housing starts and construction.

Otherwise, things look pretty good explained Vince Boberski, Senior Vice President and Strategist with FTN Financial. “If you add in December’s upward revision (The Labor Department revised up its payroll total for the prior three months--incuding a gain of 206,000 jobs in December) to this morning’s number we are right on consensus.”

Both Wieting and Boberski hesitate to give today's numbers too much weight. “The upward revisions are absolutely a massive story,” added Wieting. The data is regularly revised higher. “I think it’s difficult to talk about this as a softer than expected report for the month of January in that light.”

As in months past, today’s numbers are dragged down by declines in residential construction – “Housing is really what the economy is keyed on and what the Fed is focussed on,” said Vince Boberski. “It’s difficult to see that we’re going to have no effect from continued soft housing."

“A lot of the housing related layoffs are still to come," added Wieting. "[Nonetheless]I think we’ll be able to grow employment very much in line with estimates."

Here's the Dow, NASDAQ and S&P 500 after today's employment numbers.

S&P 500