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To: Gabriel008 who wrote (95059)	2/5/1999 10:04:00 AM
From: Mohan Marette	Read Replies (2) \| Respond to of 176387

<U.S Economy> Good report,bad report- Well it looks pretty damn good to me. Gabriel: The whole business of rate hike and inflation fears are all bunch of poppycock if you ask me. What inflation where,where? ============================================= Friday February 5, 9:39 am Eastern Time U.S. January jobs data show strong US fundamentals By Isabelle Clary NEW YORK, Feb 5 (Reuters) - U.S. companies added 245,000 jobs to their payrolls in January, in another sign the U.S. economy kicked off 1999 with almost as much momentum as it displayed at the end of 1998, analysts said on Friday. The report, which also showed the unemployment rate holding steady at this business cycle's low of 4.3 percent, further dispelled speculation that the global financial crisis is taking its toll on the long-toothed U.S. expansion, they added. ''It's a good, solid report on the U.S. economy ,'' said Michael Moran, chief economist at Daiwa Securities America. ''There is no deterioration, the economy continues to move ahead.'' The Labor Department reported non-farm payrolls rose 245,000 in January, after surging a revised 298,000 in December. The Department had first reported December payrolls at up 378,000. The report immediately weighed on the Treasury markets where the benchmark 30-year bond fell more than a half-point as its yield rose to 5.33 percent versus 5.29 percent at the close on Thursday. But Moran pointed out the details of the employment report were more about consolidation in already strong U.S. labor markets than about gangbusters data the payrolls number may suggest. Payroll gains around 250,000 are historically associated with the early part of a business cycle rather than with a nearly eight-year-old expansion. ''It's a good report, but I don't think it ranks as a great report,'' Moran said. ''There was a substantial downward revision in the prior month and a drop in the length of the workweek.'' Moran said the report had no implications for monetary policy because it did not show any acceleration in wage inflation. Average hourly earnings rose six cents in January to $13.04, in line with the roughly 4.0-percent average gain seen in several gauges of labor compensations. ''This report shows the Fed is not providing much restraint on the economy,'' added Moran who noted this may indicate that ''if they had to do it all over again, they would have not eased as much last fall. But they probably are not close to unwind some of the easing because inflation remains contained.'' Greenspan last month indicated to Congress the unemployment rate by itself is not a guide for monetary policy. ''What the recent months' evidence is -- indeed and the most recent years' -- is that the inter-relationship between tight labor markets on the one hand and wage increases and price increases, is clearly a far more complex process than is captured by the more simplistic (economic theories') views.'' Still, the bond market caved in under the healthy job report, way above the analysts' consensus in a Reuters poll that had called for a 135,000 payrolls gain in January. David Resler, managing director at Nomura Securities International, agreed the report ''contained no indication the U.S. economy is overheating.'' ''The household survey shows a huge increase in the labor force of 245,000 workers,'' Resler pointed out. ''As long as the economy keeps on attracting people to the labor force, there is nothing to be concerned about in terms of inflationary risks. The arrival of new workers precludes the need to raise salaries to retain employees under tight labor conditions.'' Labor markets actually picked up some speed over the past three months as job creation averaged 273,000, above the near-240,000 average of 1998. The U.S. expansion has created about 19 million jobs since it started in the spring of 1991 but labor inflation has remained low. Real or inflation-adjusted wages returned to their pre-1990 recession levels only recently. The employment report also delivered tentative evidence that U.S. manufacturing may be weathering the global economic crisis better than expected. Manufacturing lost only 13,000 jobs in January and 16,000 in December -- much smaller than the 60,000 and 61,000 drops seen in November and October, respectively. ''January had the smallest drop in manufacturing jobs since a 1,000 decline in September before the global crisis really hit home in full force,'' Resler said. ''We may be seeing the end of the bloodshed in manufacturing. But it may also be a long time before we see a recovery in manufacturing employment.''