US Jan Payrolls +111k,But Up-Revisions Add Strength

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US Jan Payrolls +111k,But Up-Revisions Add Strength
--AHE +0.2% for +4.0% YOY; Civ Unemployment Rate 4.6%: More Immigrants

The January employment data are another sign that the U.S. economy continues to grow strongly after a pause in the fall. However, there are indications in the report that upcoming data on production and incomes may not be as "strong" as payrolls.

January payrolls gained +111,000, slightly below consensus, but there was a +81,000 net upward revision to December and November payrolls that brought the true number higher. New seasonal adjustment factors possibly helped the gain -- all the January payroll gain was in the adjustment as is usual at this time of year.

In addition, the March 2006 benchmark was finalized at a larger-than-normal +752,000 jobs NSA. That represents on average an additional +63,000 jobs per month (but a breakdown shows most of the changes were early in 2006) and the Bureau of Labor Statistics said its additional research found no methodology problems, so this large gain is correct.

Despite minimum wage hikes, Average Hourly Earnings was modest at +0.2% for +4.0% over the year, and Aggregate hours fell. This suggests weak January production and income that may offset the jobs result in the minds of financial market participants.

Civilian Unemployment rose 0.1 point to 4.6% but a survey update may be responsible. The BLS said it found more immigrants in the labor force from the Census data, but it appears not all of them were employed.

January's payroll composition included: manufacturing -16,000, construction +22,000 (maybe from the good weather), retail +4,000, hotolds +16,000, government +14,000, and health care +18,400. The 1-month diffusion index was 55.8%, confirming broad jobs growth.

The bottom line: this was a strong report without inflation implications; January s growing well again.