Latest / Markets with Megan: A Quick Financial Markets Update / Unexpected Resilience in the Labor Market? | S3 E121 | 02-11-26

Transcript

Unexpected Resilience in the Labor Market? | S3 E121 | 02-11-26 · Markets with Megan: A Quick Financial Markets Update

• 0:00
  Megan Horneman: The labor markets proved a lot more resilient than some had anticipated.
• 0:04
  Megan Horneman: It is Wednesday, February the 11th, and this is Markets with Megan.
• 0:07
  Megan Horneman: If you like this podcast, subscribe, hit the alarm bell.
• 0:10
  Megan Horneman: You can share with friends, family, or colleagues.
• 0:13
  Megan Horneman: But we're here today to break down the economic data.
• 0:15
  Megan Horneman: And this morning we received the uh non-farm payroll report for the month of January.
• 0:20
  Megan Horneman: Now, because of the government shutdown, it was delayed.
• 0:23
  Megan Horneman: Usually we get it on the first Friday of the month, but we received it on a Wednesday today.
• 0:28
  Megan Horneman: And the markets initially really like this data.
• 0:30
  Megan Horneman: So let's dig into it.
• 0:32
  Megan Horneman: Um, the uh US non-farm payrolls, the change for January was an addition of 130,000 jobs.
• 0:41
  Megan Horneman: So this was much better than anticipated.
• 0:44
  Megan Horneman: We're looking at some data indicators, whether you look at the three-month moving average of payrolls or you look at the unemployment rate.
• 0:52
  Megan Horneman: It looks like we might be trying to find a trough and maybe move a bit higher.
• 0:56
  Megan Horneman: Now, we also received the annual revisions for payroll um additions and subtractions for the prior year.
• 1:03
  Megan Horneman: And we did actually have a million less jobs created, but you're still you're seeing that that might have been pushed prior to the most recent data.
• 1:12
  Megan Horneman: So the weakness was further behind us than was anticipated.
• 1:16
  Megan Horneman: And it does suggest that the Fed probably should have started cutting rates when they did.
• 1:21
  Megan Horneman: Um, so that's good news from uh the inflation and then these the confidence in the central bank.
• 1:26
  Megan Horneman: But what we're seeing now is that we're we're getting some green shoots here.
• 1:30
  Megan Horneman: That's what people say.
• 1:30
  Megan Horneman: When you're getting these positive um momentum, you've got the work week that rose.
• 1:35
  Megan Horneman: Um we one of the indicators we look at is temporary workers.
• 1:38
  Megan Horneman: And if temporary workers are continuously being reduced, that means that that's an indicator of leading, uh leading weakness in the jobs or jobs market because typically companies don't um fire people that fire their full-time employees, they just don't hire as many temporary workers.
• 1:55
  Megan Horneman: So um, what we saw was temporaries work temporary workers rose.
• 1:58
  Megan Horneman: That's actually the third consecutive month.
• 2:00
  Megan Horneman: Some of the other areas that saw pretty good job creation was in the private service um producing jobs.
• 2:06
  Megan Horneman: So think of private education and health.
• 2:08
  Megan Horneman: That's all a pretty big uptick, and then professional and business services.
• 2:13
  Megan Horneman: Now, leisure and hospitality, that was they created a thousand jobs for the month.
• 2:18
  Megan Horneman: So that's been slow.
• 2:20
  Megan Horneman: It's been weak, and that's been kind of like a bright spot when it comes to the labor market.
• 2:24
  Megan Horneman: And then where the continual uh reduction comes from is those government jobs.
• 2:29
  Megan Horneman: So we saw those as weak as well.
• 2:31
  Megan Horneman: Now the unemployment rate ticked lower on this, and that's because the labor force participation rate actually ticked higher.
• 2:37
  Megan Horneman: So we have um a lower unemployment rate at 4.3%.
• 2:41
  Megan Horneman: This is good news for the Fed.
• 2:43
  Megan Horneman: The Fed can continue to remain on hold.
• 2:45
  Megan Horneman: They're not in a rush to have to cut interest rates.
• 2:48
  Megan Horneman: This is also counters some of the data we received last week, whether it was on the Challenger's Jobs report or the job postings.
• 2:55
  Megan Horneman: Those things insinuated some further weakness here in the jobs jobs data, but this data is not showing that.
• 3:02
  Megan Horneman: Now, a lot of noise around some of these indicators, so we won't take this one month as a trend.
• 3:07
  Megan Horneman: We'll continue to follow this data, but for now, we think it keeps the Fed on hold.
• 3:11
  Megan Horneman: There is no rush.
• 3:12
  Megan Horneman: Now, Friday, we'll get the inflation information.
• 3:15
  Megan Horneman: And again, markets might swing on that if that shows either a hotter number or a more tame number than what's anticipated.
• 3:22
  Megan Horneman: We saw quite a bit of volatility today in the equity markets.
• 3:25
  Megan Horneman: First, as I mentioned, with this data, we saw equities rise significantly, and then we saw them reverse that loss, and now it's been up and down all day, relatively muted from an equity standpoint.
• 3:37
  Megan Horneman: That's all we have today.
• 3:38
  Megan Horneman: If you want a history of our podcast, you go to markets with Megan.