Largest non-farm employment since 1968 in the US! What could we learn from the employment report?

06.02.2023 12:47|Conotoxia Ltd Analyst Team

The US Bureau of Labor Statistics reported on Friday (3.02) that the number of non-farm employees increased by 517,000 in January (185,000 had been expected) and the unemployment rate fell to 3.4%. The data appears to have exceeded even the most optimistic forecasts. How might this affect individual industries?

US economy as strong as ever despite the crisis?

Average year-on-year employment growth in January 2023 was 3.55% and 0.32% m/m. As many as 87.3% of industries for this economy recorded year-on-year and 78.7% m/m employment growth. Employment growth occurred in many sectors. The largest were recorded in : mining - up 9.9% y-o-y, healthcare - up 7.3% y-o-y. and the information sector - by 4.4% y/y. The latter was the only one to record a decline in employment from December 2022, by 0.3%. The information sector includes businesses involved in the creation, dissemination and management of information, including publishing, software development, telecommunications and data processing. These figures may confirm recent high-profile reports of layoffs in technology companies. As such, it appears that the Vanguard Information Technology Index Fund ETF (VGT) may prosper in the coming months below the market average.

Source: Conotoxia Mt5, VGT, Daily

Inflation may be taking its toll on the average citizen in the United States. Indeed, the median real weekly wage (nominal wage minus inflation) has fallen by 7.4% since 2020, currently standing at USD 364 per week.

Source: Fred, Employed full-time: Median usual weekly real earnings: Full-time employees: 16 years and over

Which industries are hiring the most and which are laying off the most?

We saw the largest increase in employment of 3.8% m/m in the landscape and sightseeing transport industry (18.1% y-o-y), followed by garment manufacturing, for which employment increased by 2.3% during the month (up 3.2% y-o-y). The passenger transport industry also saw significant employment growth of 1.7% for the month (up 7.6% y-o-y). The travel industry seems to be doing better and the average American has decided to get out of the house and start travelling. Therefore, the future for the Consumer Discretionary Select Sector SPDR Fund (XLY) seems optimistic.

Source: Conotoxia MT5, XLY, Daily

The largest cuts in employment were recorded in: the communications industry, e.g. in the manufacture and sale of mobile phones, - down 1.29% m/m. (2.2% decrease y-o-y), the credit intermediary industry - 0.7% decrease m/m. (4.8% y/y), courier industry - down 0.3% m/m. (1.8% year-on-year). For this reason, it seems that companies such as Apple (for example) may perform worse.

Source: Conotoxia MT5, Apple, Daily

 

Grzegorz Dróżdż, Market Analyst of Conotoxia Ltd. (Conotoxia investment service)

Materials, analysis and opinions contained, referenced or provided herein are intended solely for informational and educational purposes. Personal opinion of the author does not represent and should not be constructed as a statement or an investment advice made by Conotoxia Ltd. All indiscriminate reliance on illustrative or informational materials may lead to losses. Past performance is not a reliable indicator of future results.

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76.23% of retail investor accounts lose money when trading CFDs with this provider. You should consider whether you understand how CFDs work and whether you can afford to take the high risk of losing your money.

CFDs are complex instruments and come with a high risk of losing money rapidly due to leverage. 76.23% of retail investor accounts lose money when trading CFDs with this provider. You should consider whether you understand how CFDs work and whether you can afford to take the high risk of losing your money.
Trading on CFDs is provided by Conotoxia Ltd. (CySEC no.336/17), which has the right to use the Conotoxia trademark.