Employment report Wednesday

Daily update

We get the delayed January US employment report and benchmark revisions for the past two years. For markets what is important is that economies respond to reality, not reported data. Whatever the employment reality was in 2025, it was consistent with a low fear of unemployment and US consumers willing to cut savings to pay for tariffs. Revising reported data to bring it closer to reality does not change that story.
Administration officials have been keen to stress that a weaker January employment number is not something to worry about. A weaker January number probably would worry markets. Slower hiring (not artificial intelligence) has disrupted the labor market, with the burden falling on younger people. That has implications for economic patterns (slower fast food sales, higher student loan delinquencies) without being a major overall economic impact to date.
Yesterday’s December US retail sales data were weak. This is inconsistent with the surge in credit card use, and raises questions about the accuracy of the numbers. It might be that the US affordability crisis encouraged some consumers to delay spending in the hope of January price discounting.
China’s January producer prices continue in deflation, and consumer price inflation was lower than expected. This perhaps underscores the mediocre nature of domestic demand.