The latest US nonfarm report shows that the labor market is starting to move in the direction desired by the Federal Reserve (Fed). Wage and job growth have slowed. Chances of a soft landing for the economy US A hawkish stance, urging continued interest rate hikes to complete the task of suppressing inflation.
Data from the US Department of Labor on Friday (6) showed that US nonfarm jobs rose by 223,000 in December last year, higher than market expectations, the unemployment rate fell to 3, 5% and average hourly wages increased by 4.6%. every year, both worse than the market expected.
December Nonfarm Payrolls Report Data:
- US Nonfarm Jobs Reported 223,000 in December, 200,000 Expected, 256,000 Previously Revised
- US Unemployment Rate Reported at 3.5% in December, 3.7% Expected, 3.6% Previously
- Average weekly working hours in the US in December was 34.3 hours, expected 34.4 hours, previous value was 34.4 hours
- Average hourly wages in the US increased 4.6% in December, versus 5.0% expected and 4.8% prior
- Average hourly wages in the US increased 0.3% in December, versus 0.4% expected and 0.4% previously
- December US Labor Force Participation Rate Reported 62.3%, Expected 62.2%, Previous Value 62.2%
Previously, Federal Reserve Chairman Jerome Powell has repeatedly stated his determination to curb inflation, which is bound to break the spiral of inflation and wages, therefore “wages” are expected to be the focus of monetary policy of the Fed this year.
Nick Timiraos, a Wall Street Journal reporter widely recognized by the market as the Fed’s bullhorn, commented on Friday that compared to the November report, average hourly earnings data paint a slightly less worrisome wage picture for the Fed.
Simona Mocuta, senior economist at State Street Global Advisors, said optimistically: “The nonfarm payrolls report reflects a ‘soft landing’ and the US may have a strong labor market even if wage growth slows. Ideally, this should allow the Fed to slow and suspend rate hikes soon.”
Traders see the nonfarm payrolls report as evidence that the Fed’s job of fighting inflation is nearing completion. According to CME’s FedWatch tool, traders expect the Fed to raise interest rates by 1 yard per February and keep the terminal interest rate at There is a 75% chance of just under 5%.
US stocks rebounded strongly on Friday, marking their best performance in more than a month as US bond yields fell amid expectations that the Fed would not expand its fight against inflation.dollar indexweakened.
However, Fed officials took a markedly calmer view on the nonfarm payrolls report on Friday, sticking to their hawkish stance and wanting to see more data confirming that price pressures have eased before halting the tightening.
Federal Reserve Bank of Atlanta chairman Raphael Bostic said on Friday he expects the policy rate to reach a range just above 5.00% this year and maintain it through 2024, and expects the rate to hike a meter or two next month. mentality.
“I’m currently comfortable with a rate hike of 2 or 1, and if I start to hear signs that the labor market is starting to ease in terms of tightening, then I might be more leaning towards 1,” Postik said. If it keeps slowing down gradually, we have to pivot.” He added, “I personally don’t see wages as an engine of inflation.”
Richmond Fed Chairman Thomas Barkin also stressed on Friday that the Fed still has work to do to get price hikes back to the Fed’s 2% target.
Fed Governor Cook (Lisa Cook) said there were several signs inflationary pressures were easing, including a slowdown in wage growth, but that inflation was currently above the Fed’s 2% target , which is still very worrying.
Investors will wait for more inflation data next week, with the consumer price index (CPI) expected to show price pressures weakening further in December, expected to fall to 6.5% from 7.1% of November, on track to reach 14. in the month.
