EMPLOYMENT
The economy added 143,000 jobs in January, below expectations of a 175,000 increase. However, revisions to the previous two months added an additional 100,000 jobs. The unemployment rate fell from 4.1% to 4.0% while labor force participation rose from 62.5% to 62.6%. Average hourly earnings rose 0.5% for the month and are up 4.1% year-over-year while the average workweek fell from 34.3 to 34.1 hours.
Our Take: This was a decent report despite the headline miss. Unemployment fell despite participation rising while revisions to the previous two months’ payrolls more than made up for the lower January number. The employment market did appear to slow somewhat in January (lower payrolls and shorter workweek) but some of this may have been weather related. All-in-all, this month’s report is unlikely to move the Fed off their “wait-and-see” stance.
BANK OF ENGLAND
The Bank of England (BOE) cut its key policy rate by 25 basis points (bps) with two members voting for a 50bps cut. The bank’s updated forecast projected a higher peak in inflation and slower growth than was expected. Traders pushed the pound lower and increased bets on a lower terminal policy rate.
Our Take: The BOE is viewing the current rise in UK inflation as transitory and unlikely to survive the challenging growth outlook. The lower growth forecast is a reminder that the Labour government’s economic program will take time to produce growth benefits.
MUNICIPALS
Municipal issuance reached $36.3 billion in January. This figure is higher than the January 2024 amount, which totaled $31.8 billion according to the Securities Industry and Financial Markets Association (SIFMA). January’s amount is also higher than December’s $33.7 billion of issuance.
Our Take: Typically, January is not a busy month for new municipal issuance. Many suspect that the strong January issuance number was due to issuers wanting to avoid both the period around the election and the holiday weeks. Should the strong issuance continue, 2025 could be a record year.