A “Now Hiring” sign at Jamba Juice in San Francisco, California, US, on Monday, June 26, 2023.
David Paul Morris | Bloomberg | Getty Images
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What you need to know today
The bottom line
U.S. jobs growth started the year firing on all cylinders.
January’s report out on Friday was a blowout. It indicated remarkable strength of the labor market, which bodes well for the broader economy.
Employers added 353,000 jobs for the month, defying economists’ forecasts. The unemployment rate held steady at 3.7%, against the estimate for 3.8%. What’s more, both November and December data were revised up.
There was more good news on the wage front, which came in strong, up 4.5% last month from a year earlier. Average hourly earnings also increased 0.6%, double the monthly estimate.
The White House seized on the solid data for a quick victory lap, unsurprisingly.
“America’s economy is the strongest in the world. Today, we saw more proof…” President Joe Biden said in a statement.
“Our economy has created 14.8 million jobs since I took office, unemployment has been under 4% for two full years now, and inflation has been at the pre-pandemic level of 2% over the last half year,” he added.
Yet, the job market’s surprising resilience throws a wrench into the Fed’s plans to lower interest rates.
Last week, Fed Chair Jerome Powell essentially ruled out a March rate cut, citing a need for more evidence that inflation was firmly under control.
A scorching jobs report will likely fuel the Fed’s thinking to further delay rate cuts for this year. This means, investors may need to readjust their expectations.