Speaker 1: Bloomberg Audio Studios, podcasts, radio news. The headline is the
Speaker 1: labor market appears to be stabilizing.
Speaker 2: Today, the Bureau of Labor Statistics came out with one
Speaker 2: of the year's most anticipated data dumps, a report on
Speaker 2: hiring and firing in January and a revision of the
Speaker 2: jobs numbers from last year. Molly Smith, a Bloomberg US
Speaker 2: Economy editor, says that heading into today, economists' expectations had
Speaker 2: been low.
Speaker 1: We keep seeing these huge job cut announcements coming out
Speaker 1: of big companies, and that seems to be making a
Speaker 1: lot of big news and making people really anxious.
Speaker 3: About the job market. But you get a report like
Speaker 3: this and it's.
Speaker 1: Like, well, there was a lot of really positive things
Speaker 1: that happened.
Speaker 2: The US economy added one hundred and thirty thousand jobs
Speaker 2: last month, according to the BLS report, far more than
Speaker 2: economists were projecting, and the unemployment rate actually dropped to
Speaker 2: four point three percent. The takeaway the twenty twenty six
Speaker 2: labor market could be stronger than we thought.
Speaker 1: To see the way that the January numbers came in,
Speaker 1: not just the beat and hiring, but also the drop
Speaker 1: and the unemployment rate, which was not expected. Really just
Speaker 1: showed that the labor market seems to be gaining its footing.
Speaker 2: But Mollie says, the other takeaway is that the labor
Speaker 2: market of twenty twenty five was weaker than originally reported.
Speaker 1: The pace of hiring originally last year was around forty
Speaker 1: nine thousand jobs added per month on average.
Speaker 3: The revisions today show that was just fifteen thousand.
Speaker 1: In the world of economics, that's of basically nothing, so
Speaker 1: that's really not a great number.
Speaker 2: The Federal Reserve will be weighing all these numbers as
Speaker 2: it sets rates in the months ahead, and Mollie says
Speaker 2: the odds are now looking better that it will stay
Speaker 2: the course.
Speaker 3: For the Fed.
Speaker 1: This means that they're fairly justified in holding interest rates
Speaker 1: right now. You know, there really is no rush to
Speaker 1: cut interest rates when you have an economy, a job
Speaker 1: market that seems to be studying the way that it is,
Speaker 1: and it looked like in hindsight that the time that
Speaker 1: the cuts that they already made were fairly well timed.
Speaker 2: I'm Sarah Holder, and this is the big take from
Speaker 2: Bloomberg News Today. On the show, the US labor market
Speaker 2: shows signs of stabilizing after a really slow year. What
Speaker 2: today's jobs numbers mean for job seekers, employers, and the
Speaker 2: fet So let's talk about what the report revealed about
Speaker 2: the state of the labor market right now. Those January numbers.
Speaker 2: Where are the bright spots and where are there areas
Speaker 2: of concern in the January jobs report?
Speaker 3: So I guess you.
Speaker 1: Could call this a bright spot, but also an area
Speaker 1: of concern was that healthcare continues to dominate hiring and
Speaker 1: actually have like the most amount of jobs added since
Speaker 1: twenty twenty, and healthcare dominated hiring last too, really was
Speaker 1: the majority of all job growth. Ideally, you'd want to
Speaker 1: see more breadth of hiring and seeing this across more industries.
Speaker 1: There were some other industries though, that did add jobs,
Speaker 1: Manufacturing notably first time in a long time that we
Speaker 1: saw job gains there. We saw federal government continued to
Speaker 1: cut jobs, not really surprising. That's more or less the
Speaker 1: industry breakdown. Looking to some other positive aspects, we also
Speaker 1: get another survey in the jobs report, that is the
Speaker 1: Survey of households that showed that more people voluntarily quit
Speaker 1: their jobs, which usually is a sign that you feel
Speaker 1: pretty confident in your ability to find a new one.
Speaker 3: That number has been.
Speaker 1: Pretty low for the most part. You know, people will
Speaker 1: feel fairly insecure, don't really think this is a good time,
Speaker 1: and you know, just up and leave.
Speaker 2: Your job, right the big freeze, Right, that's what people
Speaker 2: were talking about. People too afraid to leave their jobs.
Speaker 2: That seems to be changing perhaps.
Speaker 1: I mean, you know, another thing economists will always tell
Speaker 1: you is only one month of data, but if sustained,
Speaker 1: that could be a sign that maybe things are turning.
Speaker 1: You saw far less people reported that they're working part
Speaker 1: time for economic reasons, so that's something that had been climbing.
Speaker 1: Also a sign, you know, of some financial distress. So
Speaker 1: that was positive to see that fall.
Speaker 2: And one of the other things that was on people's
Speaker 2: mind hetting into this jobs report, where are these headline
Speaker 2: grabbing layoffs? Amazon announced it would be cutting about sixteen
Speaker 2: thousand jobs in January. The Washington Post, also owned by
Speaker 2: Amazon founder Jeff Bezos, fired more than three hundred journalists.
Speaker 2: How are those layoffs showing up in the job market
Speaker 2: right now and are there signs of some industries contracting
Speaker 2: or were these kind of outliers.
Speaker 1: It's hard to reconcile the two because you see these
Speaker 1: announcements of layoffs from these big companies you mentioned Amazon
Speaker 1: Ups was another, and they haven't really translated into actual
Speaker 1: layoffs in the aggregate for the most part. One thing
Speaker 1: to note is that announcements are simply announcements. They're not
Speaker 1: necessarily meaning that people are going to be fired right
Speaker 1: then and there. Course at the post they unfortunately were.
Speaker 1: But in a lot of these other companies that can
Speaker 1: be spread out for months, you know when those actual
Speaker 1: layoffs might happen. So even though we have had a
Speaker 1: lot of these announcements, they haven't in the data shown
Speaker 1: up as far as.
Speaker 3: Actual layoffs will go. Yeah, that's that's really helpful.
Speaker 2: So those kinds of announcements could show up in you know,
Speaker 2: a March report or an April.
Speaker 3: Report, or they might not show up at all.
Speaker 1: Maybe it was an announcement that was you know, at
Speaker 1: one point in January. Who knows, maybe things change and
Speaker 1: they weren't actually enacted.
Speaker 3: When you look back.
Speaker 2: Over decades, job creation has often been tied to a
Speaker 2: growing economy. Right, is the dynamic any different now? Given
Speaker 2: the growth of AI, worries that AI is coming for
Speaker 2: Americans jobs, should these numbers be viewed through a different lens?
Speaker 2: At all.
Speaker 1: I mean, obviously we had a great report today, but
Speaker 1: I think in general it's absolutely fair to say that,
Speaker 1: you know, the labor market has absolutely slowed down from
Speaker 1: you know, those post pandemic peaks, and that we have
Speaker 1: seen one that has been gradually cooling now for a
Speaker 1: number of years. Today's does not change that, and it's
Speaker 1: difficult to then reconcile that with what has been really
Speaker 1: strong GDP numbers. That you see an economy that is
Speaker 1: expanding at some of the fastest paces in years, yet
Speaker 1: the labor market has been fairly slow. The reason why
Speaker 1: you can look at those things is because the way
Speaker 1: that GDP is actually calculated has nothing to do with
Speaker 1: the chop market, which is also why it's a difficult
Speaker 1: way to measure the US economy. So the economy has
Speaker 1: been growing as fast as it is in the last
Speaker 1: few quarters largely because of a virtual in trade policy.
Speaker 1: You know that there had been such a huge rush
Speaker 1: at the beginning of twenty twenty five to import as
Speaker 1: much as companies could ahead of those expected tariffs that
Speaker 1: did come in April, and the way that GDP is calculated,
Speaker 1: that would then add to growth when you don't have
Speaker 1: import activity as strong all else equal, So that's been
Speaker 1: a lot of what's been keeping GDP so elevated, and
Speaker 1: that's why it's hard to then look at the job
Speaker 1: market next to that and see how the two compare well.
Speaker 2: I also want to look closer at some of the revisions.
Speaker 2: Annual revisions are released every January. The report we got
Speaker 2: today showed that last year's job market was weaker than
Speaker 2: originally reported. How much weaker and how do we know?
Speaker 1: So this is where it gets. Also, there's just so
Speaker 1: many layers to this. There's a few different kinds of
Speaker 1: revisions that BLS carries out. There's one that was the
Speaker 1: main headline revision. We call it the benchmark revision, and
Speaker 1: that has to do with basically incorporating a more accurate,
Speaker 1: but less timely employment series that is based on actual.
Speaker 3: Unemployment insurance records. So that's it just has a bit
Speaker 3: of a lag.
Speaker 1: It's a quarterly series, so that one updated payrolls through
Speaker 1: March of twenty twenty five, and then there's another set
Speaker 1: of revisions that updates how BLS accounts for businesses that
Speaker 1: own open and close. The net number between those two
Speaker 1: that impacts the rest of twenty twenty five, as well
Speaker 1: as you know, a model that then influenced payrolls beyond that,
Speaker 1: and then there's also an adjustment of how BLS factors
Speaker 1: for seasonal adjustment factors.
Speaker 3: So all of those things combined, it's a lot going on.
Speaker 3: I think the easiest way to think.
Speaker 1: About this is that over the course of twenty twenty five,
Speaker 1: the average pace of monthly job growth was now fifteen
Speaker 1: thousand versus initially reported forty nine thousand. That essentially incorporates
Speaker 1: all of the revisions together, and I think that's the
Speaker 1: easiest way to think about it.
Speaker 2: How does that stack up historically? How should we think
Speaker 2: about that number?
Speaker 3: How low is that? It's low?
Speaker 1: It's like I'm trying to that's essentially like the same
Speaker 1: as like there really was no hiring, Like that's what
Speaker 1: we would call anemic, you know, un dynamic, barely chugging
Speaker 1: along like there was like not really a whole lot happening.
Speaker 2: Molly, you've walked us through all the different kinds of
Speaker 2: revisions that we're looking at in conversation right now. Can
Speaker 2: you remind us why these revisions happen every year? What
Speaker 2: new information does the BLS incorporate in this data, right.
Speaker 1: So the big one is what I had referred to
Speaker 1: as that series that is more accurate but less timely.
Speaker 1: It's called the Quarterly Census of Employment and Wages QCW
Speaker 1: for sure, and that is really what a lot of
Speaker 1: people would say is probably like the one of the
Speaker 1: more accurate series of employment that we get. You know,
Speaker 1: this is just how statistics work, and that if you
Speaker 1: want to balance speed and accuracy, you have to accept
Speaker 1: that as you get more data, that numbers are going
Speaker 1: to be different. And that's just a trade off that
Speaker 1: you have to be comfortable with. You want to see
Speaker 1: the first Friday of the following month what the job's
Speaker 1: number was. People don't have the patience to wait longer
Speaker 1: for when more data will come in. So if you're
Speaker 1: going to demand that kind of speed, you have to
Speaker 1: then accept that as more data comes in in subsequent months, quarters,
Speaker 1: even years, that the numbers are going to be revised,
Speaker 1: and in time that does make the numbers more accurate.
Speaker 2: I mean that speaks to something else that's significant about
Speaker 2: this report is that the data is backward looking at
Speaker 2: this point. So what does it mean for how we
Speaker 2: should be viewing the labor market today? That there was,
Speaker 2: you know, barely chugging along job growth in twenty twenty five.
Speaker 2: What does that mean for twenty twenty six.
Speaker 1: Well, it sets the bar a little low for where
Speaker 1: we're starting from, that's for sure. But if you look
Speaker 1: at say that now, the average pace of monthly job
Speaker 1: growth in twenty twenty five was fifteen thousand compared to
Speaker 1: today's number was one hundred and thirty thousand. Just comparing
Speaker 1: those two, obviously there's a lot more going on that
Speaker 1: seems like more than stabilizing to me. I mean, that's
Speaker 1: like a pretty huge search.
Speaker 2: But guess we'll know next year how that number is revised.
Speaker 1: Well, even see next month how that number is revised
Speaker 1: and the following month, and again this happens multiple times,
Speaker 1: so we'll see how that one thirty numbers sticks.
Speaker 3: But as it stands today, I think you can say that.
Speaker 1: Powell did have the right idea when he spoke at
Speaker 1: the January FED meeting that the labor market does appear
Speaker 1: to be stabilizing. It's not just the unemployment rate that
Speaker 1: perhaps hiring two is maybe picking.
Speaker 3: Up a little bit as well.
Speaker 2: So the January jobs report held good signs about the
Speaker 2: labor market in the year ahead. But with layoffs in
Speaker 2: the news and affordability a growing concern, how will the public, politicians,
Speaker 2: and the Fed respond that's next. This month's sunny jobs
Speaker 2: report doesn't address Americans' persistent concerns about inflation and affordability,
Speaker 2: and it's not likely to diminish the sense of a
Speaker 2: vibe session the idea that many people feel like the
Speaker 2: economy isn't working for them, regardless of what the economic
Speaker 2: data show. So I asked Bloomberg US econom editor Mollie
Speaker 2: Smith how she reconciles the strong January jobs numbers with
Speaker 2: people's current perceptions of the labor market.
Speaker 1: This is what's been really challenging about squaring survey data
Speaker 1: with what we call hard data, and that the surveys
Speaker 1: are consistently far more negative than what the actual numbers show.
Speaker 1: There is a survey that the government conducts that it's
Speaker 1: a hypothetical. It asks if you had to pay for
Speaker 1: an emergency four hundred dollars expense, could you do it?
Speaker 1: And that's something that people have tracked for a long
Speaker 1: time and how that share has like declined by and
Speaker 1: large for a while. But there was another survey provider
Speaker 1: who actually asked people, did you have an expense and
Speaker 1: were you able to pay it? Now do you think
Speaker 1: you can? But were you able to? What actually happened?
Speaker 1: And by and large people were able to pay it.
Speaker 1: So I think some of that just goes to show
Speaker 1: that people maybe are more resilient than they report to
Speaker 1: be and will find a way, you know, we did.
Speaker 2: The other serve that I always look at is how
Speaker 2: likely do you think it would be to find another
Speaker 2: job if you were fired tomorrow?
Speaker 3: Right?
Speaker 2: And that number when it's low, feels really anxiety inducing
Speaker 2: about the state of the economy. But as you said,
Speaker 2: you need to kind of match that with the actual
Speaker 2: odds of finding another job, or people's actual success rates
Speaker 2: and finding a job.
Speaker 1: Right, like did you actually quit your job and try
Speaker 1: to find another one or that's just your case sitting
Speaker 1: here employed today, if you took a guess if you
Speaker 1: were in that situation. And I think that's where you
Speaker 1: see a huge divergence in some of these numbers. That's
Speaker 1: also why the economy as a whole is also still
Speaker 1: doing really well. That we look at these sentiment surveys,
Speaker 1: particularly for what it means for consumer spending, which you
Speaker 1: would think based on these surveys that people aren't spending
Speaker 1: any money at all, but that's not at all what
Speaker 1: the actual data suggest, and that spending is still holding
Speaker 1: up really well, as is the overall economy.
Speaker 2: So, I mean, given the fact that how people feel
Speaker 2: about the economy really matters politically, I'm wondering what this
Speaker 2: report means for the Trump administration.
Speaker 1: Well, he did just tweet a post that, you know,
Speaker 1: great job numbers today, you know, the Golden Ages upon us,
Speaker 1: everything looks great, which you know is a little bit
Speaker 1: of like selective attention. I would say on his part.
Speaker 2: He was president all last year that too, but we
Speaker 2: had a positive aspect of the report to focus on it.
Speaker 1: I'm not saying that he was wrong to focus on that,
Speaker 1: but I'm saying it's a little bit selective and maybe
Speaker 1: excluding the part of where he presided over twenty.
Speaker 2: Twenty five, right, right, I mean in August, the Bureau
Speaker 2: of Labor Statistics revised some of its data downward, saying
Speaker 2: the US economy added fewer jobs than it had previously said,
Speaker 2: and Trump called the numbers rigged. He fired the BLS commissioner.
Speaker 2: We talked about it on the podcast, but he hasn't
Speaker 2: had that kind.
Speaker 3: Of reaction this time, not that I've seen so far.
Speaker 3: I mean, the day is young. Who knows.
Speaker 1: There's a lot of positives to take from this. But
Speaker 1: you know, for somebody who has been very critical of
Speaker 1: this data agency, of the revisions that they make, what
Speaker 1: it says about the labor market as a whole, it
Speaker 1: seems to be omitting that entire chunk.
Speaker 3: Of the equation.
Speaker 2: So we're also getting a report on the consumer Price Index,
Speaker 2: which measures inflation this Friday. How do today's jobs numbers,
Speaker 2: which are generally better than expected for January change, How
Speaker 2: we're going to view those inflation numbers? How are you
Speaker 2: going to put those two numbers in conversation.
Speaker 1: Well, something else that we saw in this job's report
Speaker 1: today that we didn't get into was wage growth, which
Speaker 1: was a bit stronger than expected. So you know, usually
Speaker 1: that is the real engine of course, of like consumer spending,
Speaker 1: of like what your pay is, and to see then
Speaker 1: how that might factor into demand for goods and services
Speaker 1: and how that could infect their prices in January.
Speaker 3: I think that would be the correlation we would look for.
Speaker 2: And I mean a body that will be looking very
Speaker 2: closely at the CPI data and the jobs data.
Speaker 3: Is the Federal Reserve.
Speaker 2: Of course, what does this job's report mean for the
Speaker 2: chances that they cut rates next meeting?
Speaker 1: Oh, that was already about zero to say, like a
Speaker 1: cut form March. That wasn't going to happen coming into
Speaker 1: this report. The expectation was more around June for the
Speaker 1: cut tappen at that meeting, But after today, basically that
Speaker 1: shows that again that like what Pale has been saying
Speaker 1: that like policy is well positioned right now, we feel
Speaker 1: like we're in a good place, we can adjust if needed,
Speaker 1: and that there is no urgency to cut.
Speaker 3: All of that very much validated today.
Speaker 1: You see that the way Trump reacted to the numbers,
Speaker 1: saying that you know, we had such great job numbers,
Speaker 1: as you know, we should be playing among the lowest
Speaker 1: interest rates in the world. It's a little bit more
Speaker 1: complicated than that that. You know, if you're seeing the
Speaker 1: job market grow that the way it is, you wouldn't
Speaker 1: think you would need lower interest rates to support it.
Speaker 1: And that's how the FED is looking at this.
Speaker 2: In May, we could see a new FED chair. Kevin
Speaker 2: worsh is Trump's pick for the job. Has worsh responded
Speaker 2: to these numbers at all. How might this change his thinking?
Speaker 3: I think it's going to make things very complicated for him.
Speaker 3: You know that.
Speaker 1: Again, there's a lot of time between now and May.
Speaker 1: He also has to be confirmed first. But basically, he
Speaker 1: took this job with the understanding that the president wants
Speaker 1: him to cut interest rates. Obviously it's not just his decision.
Speaker 1: There's a whole body of policy makers. But certainly the
Speaker 1: chair tries to rally a consensus and speaks for the
Speaker 1: entire Central Bank. So Trump did say like that the
Speaker 1: understanding of like warshaking this job is that he's going
Speaker 1: to cut rates, and of course Warsh knows that too.
Speaker 1: The whole country knows that. The whole world knows that
Speaker 1: this is what Trump wants. The numbers make that again,
Speaker 1: as we said here today, a bit more complicated. This
Speaker 1: doesn't look like an economy right now that is calling
Speaker 1: for any immediate cut to interest rates.
Speaker 2: This is the Big Take from Bloomberg News. I'm Sarah Holder.
Speaker 2: To get more from the Big Take and unlimited access
Speaker 2: to all of Bloomberg dot com, subscribe today at Bloomberg
Speaker 2: dot Com Slash Podcast Offer. Thanks for listening. We'll be
Speaker 2: back tomorrow,