Despite concerns about an economic slowdown due to high interest rates, it has been confirmed that the US job market remains hot.
According to the employment report released by the U.S. Department of Labor on the 5th (local time), the number of non-farm jobs in the U.S. in December increased by 216,000 from the previous month. It significantly exceeded the expert forecast (170,000) compiled by the Wall Street Journal (WSJ) and was larger than the increase last November (173,000).
The unemployment rate in December was 3.7%, lower than market expectations (3.8%). Job cuts also decreased in December, and the number of recent unemployment insurance claimants appears to be lower than expected. Immediately after the employment report was announced on this day, the interest rate on 10-year US Treasury bonds showed an upward trend, breaking through the 4% annual level again.
Earlier this month, an advertising sign saying ‘Recruiting’ was displayed at a store in Los Angeles, California./Yonhap
The December employment report was considered an important indicator of the pace of interest rate cuts by the Federal Reserve. If the labor market is stronger than expected, the possibility of lowering interest rates becomes slim.
As the job market showed a strong performance today, expectations for an interest rate cut appear to be further diminished. This is because hot employment can stimulate the slowing price rise again. According to the Chicago Mercantile Exchange (CME) FedWatch tool, a U.S. benchmark interest rate prediction model, the probability that the Federal Reserve will lower interest rates by 0.25 percentage points in March of this year decreased from 72.4% a week ago to 53.8% immediately after the employment indicator was announced.
According to the minutes of the December Federal Open Market Committee (FOMC) meeting released on the 3rd, “Meeting participants generally stated that it is important to maintain a prudent and data-dependent approach when making monetary policy decisions and to ensure that inflation is sustainable toward the target.” “We reaffirmed that it is appropriate to maintain a restrictive stance for the time being until it becomes clear that the rate will decline,” which dampened expectations of an interest rate cut.
2024-01-05 13:45:00
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