Closing post
Time to recap.
The US added 353,000 jobs in January, almost twice as many than forecast, in a sign that the economy is stronger than thought – and that interest rates may remain higher for longer.
The latest non-farm payroll report blew expectation away – economists had expected around 180,000 new jobs to be created last month. November and December’s data was revised higher too.
US January Jobs Report: Rising rates mid year resulted in a modest decline of 7K in professional business service jobs. Since then the sector has added 119K. Whatever "mid-cycle" scare happened, it ended as firms responded to robust economic demand and resumed hiring. It's a… pic.twitter.com/U3LCZMg5xi
— Joseph Brusuelas (@joebrusuelas) February 2, 2024
Wage growth was also pacier, increasing by 4.5% per year or by 0.6% in January alone.
President Biden welcomed the report, saying:
America’s economy is the strongest in the world. Today, we saw more proof, with another month of strong wage gains and employment gains of over 350,000 in January, continuing the strong growth from last year.
News of the strong jobs market could help Biden in this year’s presidential race, which we are covering here:
Economists said the strong jobs report made it very hard to see the US Federal Reserve starting to cut interest rates at its next meeting in March, while a May rate cut was also seen as less likely.
Daniele Antonucci, chief investment officer at Quintet Private Bank, explains:
The strength of the US labour market continues to undermine the market’s view that interest rates will be cut soon and sharply. Job and wage growth, once again, were both stronger than expected, and the unemployment rate was lower.
This looks like a genuine surprise relative to the consensus, with employment figures almost double economists’ forecasts, far outstripping the highest projections across the main analyst polls.
Even though we think the Fed is likely to start lowering its policy rate at some point this year, we believe that job creation in the US is currently too strong to expect that to happen in the near term.
Here’s the full story:
Here’s the rest of today’s business news:
Traders have scaled back their bets on a US interest rate cut in May, putting the odds at around 88%, the Financial Times points out.
Before the report, a cut in May had been fully priced in.
Did you "price in" Fed rate cuts for March or May? Well, it might be time to price them out.
— Kalshi (@Kalshi) February 2, 2024
At yesterday's FOMC meeting, Jerome Powell stressed that the Fed was not looking for a weaker labor market before cutting rates. After today's job report, would he say the same? 🧵 pic.twitter.com/FOeSurgGby
