US Jobs Growth exceeds expectations.

Surprising Surge in US Jobs as Growth Exceeds Expectations Fueling Market Momentum

In a remarkable twist, US jobs growth in January surpassed economists’ predictions, marking the labor market’s resilient streak amid anticipated slowdowns. The Labor Department’s report revealed a robust addition of 353,000 jobs last month, the most significant increase in a year. December’s payroll gains also saw an upward revision to 333,000 from 216,000, indicating that higher interest rates may not have dampened hiring as initially projected.

Maintaining its strength, the unemployment rate held steady at 3.7% in January. Additionally, wages exceeded expectations by jumping 4.5% compared to the previous year. However, a slight drop in hours worked was noted, potentially attributed to adverse winter weather conditions, as suggested by some analysts.

The release of the US Jobs report triggered a surge in bond yields, signaling investor confidence that the robust data might delay the Federal Reserve’s anticipated interest rate cuts. The S&P 500 responded positively with a midday trading increase of around 0.6%. The yield on the 10-year Treasury note climbed to 4.045%, reflecting the inverse relationship between bond prices and yields.

This impressive payroll report positions the Federal Reserve to likely maintain interest rates near a 23-year high during its upcoming meeting on March 19-20. Officials are expected to monitor further evidence of the sustained trend of lower inflation. The recent meeting affirmed the decision to keep rates unchanged, with Chair Jerome Powell indicating a potential rate cut later this year if lower inflation persists. Powell acknowledged the strength of the current economy, expressing confidence tempered by the expectation of moderated growth.

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US Jobs Rises
Table A. Revisions to total nonfarm employment, January to December 2023, seasonally adjusted (Numbers in thousands). Source Labor Department

The average hourly earnings of all employees on private nonfarm payrolls increased by 0.6 percent, or 19 cents, to $34.55 in January. This represents a 4.5 percent rise in average hourly earnings over the past 12 months. The average hourly earnings of private-sector production and nonsupervisory employees also went up by 0.4 percent, or 13 cents, to $29.66 in January.

The average workweek for all employees on private nonfarm payrolls was 34.1 hours in January, 0.2 hour shorter than the previous month and 0.5 hour shorter than the previous year. In manufacturing, the average workweek remained at 39.8 hours, while overtime decreased by 0.1 hour to 2.7 hours. The average workweek for production and nonsupervisory employees on private nonfarm payrolls was 33.5 hours in January, 0.2 hour shorter than the previous month.

The total nonfarm payroll employment for November was revised upwards by 9,000, from +173,000 to +182,000, and the total for December was revised upwards by 117,000, from +216,000 to +333,000. These revisions increased the combined employment for November and December by 126,000 more than the initial estimates. The monthly revisions are based on additional reports from businesses and government agencies that were received after the last published estimates, as well as the recalculation of seasonal factors. The annual benchmark process also affected the revisions for November and December.


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