"Cold and stormy winter weather continued to weigh on the job numbers. Underlying job growth, abstracting from the weather, remains sturdy. Gains are broad based across industries and company sizes, the biggest exception being manufacturing, which shed jobs, but that is not expected to continue."
-Mark Zandi, chief economist at Moody's Analytics
It seems that December's payrolls report was simply not taken into consideration by the Fed, as weak job growth was explained by bad weather conditions. Nevertheless, one case can be an occasion, however, a second straight month of disappointing payrolls can be interpreted as economy's inability to create new working placed.
A monthly report from the ADP Research Institute showed the world's largest economy added 175,000 in January, following a revised 227,000 increase in December that was weaker than initially reported. The median projection stood at 185,000. The company cites colder-than-normal weather conditions that limited progress in the job market. Large and medium-sized companies registered increase of 34,000 and 66,000 respectively, while small businesses added 75,000 new jobs over the period. Another worrying fact is the note from the ADP that pointed out some businesses in the services sector are planning to reduce labour expenses, by reducing the staff level, suggesting the indicator will continue disappointing.
On the back of disappointing news the U.S. Dollar lost some ground against other major currencies, with EUR/USD rising to 1.3555 while USD/JPY declined to 100.80. Friday's non-farm payrolls as well as overall unemployment rate are expected to have a stronger impact on financial markets.
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