It’s the start of 2024, and what better way to end Week No. 1 than a Bureau of Labor Statistics report on the state of US employment? Would it finally provide clarity on the direction of the US economy? Alas, it would not!

In fact, Friday’s report left investors as confused about the economy’s prospects as ever. As yours truly says in a reaction column, the confusion started at 8:30 a.m. New York time with the revelation that nonfarm payrolls grew by a better-than-expected 216,000 (stock futures down; bond yields up). The prevailing explanation for the move was that labor market strength risked fanning inflation, which would delay the start of any Fed policy rate cuts. But just 90 minutes later, a separate report from the Institute for Supply Management suggested that services employment was in fact collapsing (stocks up; yields down). By about lunchtime, the market had more or less figured out that the signals from both releases were more or less useless — and prices ended the day hardly changed from Thursday.

So what are we to make of all this whiplash? First, markets seem intent on overreacting to month-to-month movements in inherently noisy data with wide margins of error. The ISM Services number is based on a panel of a few hundred purchasing managers and executives. The BLS’s establishment survey — though vastly larger — tends to get revised by tens of thousands of jobs each month, meaning the initial data can be highly misleading. Second, traders look determined to exaggerate the extent to which the labor market has been influencing inflation and, ultimately, Federal Reserve policy rates.

On the topic of the direction-less economy: there’s one particular area that’s looking particularly lost, and that — as Paul J. Davies says — is the business of M&A banking. As Paul says, M&A activity is coming off an anemic 2023 and hoping to find its footing in 2024. Unfortunately, private equity activity has been hampered by high funding costs and the shuttered IPO market (which is preventing exits from older investments to pave the way for new ones). Bankers are still hopeful they can make a decent year of it with corporate deals, though the broader trajectory may depend in part on what transpires at the Fed. “Assuming interest rates have at least stopped rising, this year ought to be better than last for bankers squeezing real work out of their healthy pipelines and dialogues,” Paul says. “But it probably won’t be until the second half before we can be sure that’s the case — and in truth there are enough economic and political dangers to slam all of this into a ditch at any moment.”

The US labor market isn’t alone in starting the year with conflicting signals and mixed messages.