U.S. payrolls increased more than expected in January, rising 267,000 versus a forecast of 222,000. In addition, the prior month’s payroll number was revised higher by 77,000 to 329,000. Over the last three months, payrolls have increased an average of 336,000, the biggest three month gain in 17 years. The unemployment rate increased to 5.7% from 5.6% due to an increase in the labor force as more people search for jobs. Also coming in better than expected was the monthly increase in average hourly earnings which increased 0.5% for the month and is up 2.2% over the last twelve months. The average work week remained unchanged at 34.6 hours.
Treasury yields increased following the jobs report with the yield on the benchmark 10-year Treasury note up 7 basis points from yesterday’s close. Yields on shorter-term notes are up more than longer-term notes as investors move up the expecting timing of the first Fed rate increase.
Marco Bravo, CFA
Principal and Senior Portfolio Manager
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