The data indicated that employment in the US private sector fell by 301K in January, marking the second monthly decline in employment since April 2020, when the US entered quarantine for the first time. This appears to be a significant loss, according to the consensus estimates for 207K upwards, but also a nearly 1 million drop from the revised December employment of 776K. We’ll see if it’s temporary by looking at the details.
If we look at the sub-items; At the beginning of 2022, we see that there is actually a significant Covid effect in the sectoral distribution and the distribution according to company scales. 274K job losses on the service sector side. While entertainment and accommodation are the sectors most affected by direct job losses, there are 144K job losses in small enterprises and 59K in medium enterprises on a scale basis. Despite the positive trend in ISM data, a 21K decrease is observed in manufacturing within ADP. Tomorrow we will compare the employment item in the ISM service data with the job losses pointed to by the ADP.
The White House lowered expectations for this week’s U.S. jobs report, saying short-term absences from workers due to Omicron could overstate last month’s number of unemployed. The weakness pointed out by the ADP will keep the headline employment prospects minimal. There has been a weak correlation between ADP and NFP in recent years. The facts and latest projections in the weekly jobless claims may lower expectations for Friday’s data. In terms of the economy in general, we can deal with the activity levels revealed by ISMs, that a slowdown cannot be signaled only from Covid. Therefore, there is no stepping back for the Fed, we will look at the issue in terms of employment plus wages, and the problems in increasing the workforce now have an increasing effect on wage inflation. It has the potential to be the new subject of inflation.
Kaynak: Tera Yatırım
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