US DATA: Strong Household Survey Contains Several Questionable Findings (1/2)

The Household Survey was anticipated to provide a cleaner read on current labor market conditions in January than the much-revised Establishment Survey. Whether it accomplished that is questionable. It showed a stronger labor market than expected, with the unrounded unemployment rate of 4.283% not just below the consensus of 4.4% and 4.375% prior, but also the lowest since July. We start by looking at the areas of strength in the report, before examining some of the curiosities that call that apparent strength into question.

• The number of unemployed dropped 141k, after December's 278k reduction, marking the biggest 2-month drop since early 2022.
• And total household employment rose 528k (after +232k), the best since November 2023 (for a non-population revision month).
• It came as the labor force rose 387k with participation up 0.1pp to a 9-month high 62.5%, resulting in the highest employment-to-population ratio since April 2025 at 59.8%.
• U-6 underemployment fell 0.4pp to 8.0%, like the U-3 rate a post-July low, with those working part-time for economic reasons dropping 453k in the biggest monthly fall since mid-2022.
• The mean duration of unemployment pulled back to 23.9 weeks after December's 24.4, with the total number unemployed 27 weeks or more falling to 1,835k for the lowest since September.
• And we also note a drop in unemployment rates across some key demographics that have been cited by the Fed: black/African-American (7.2% after 7.5% for the lowest since July and down from 8.2% in November), and those with less than a high school diploma (5.2% after 5.6%, for a 12-month low)