Jobs Growth Was Double the Forecast. It’s a Challenge for the Fed.

[dasari4kntr]

The U.S. added 517,000 jobs in January, more than economists had anticipated, while the unemployment rate fell to 3.4% from 3.5% in December.

Growth in nonfarm payrolls increased from 223,000 in December—compared with the consensus of 185,000 jobs among economists surveyed by FactSet. Economists had expected the unemployment rate to be 3.6%.

Friday’s employment report indicates the labor market remains tighter than expected, a setback for the Federal Reserve’s effort to cool inflation by slowing down the economy with higher interest rates. The growth in employment was led by gains in leisure and hospitality, professional and business services, and health care.

Wage growth, a particular focus for the Fed, was mostly in line with expectations, with average hourly earnings up by 10 cents, or 0.3%, on a monthly basis, and 4.4% on an annual basis. Economists had estimated wage growth of 4.3%.

More signs that the labor market is running hotter than thought come from revisions to past data. Nonfarm payrolls growth was revised upward for both December and November. December added 34,000 more jobs than the government had reported, while November’s gain was raised by 37,000.

The stock market dropped on the news. Futures tracking the Dow Jones Industrial Average DJIA –0.11%  fell 150 points, or 0.4%, having previously traded close to flat. S&P 500 SPX +1.47%  futures shed 0.9% and contracts following the Nasdaq 100 NQ00 –2.00%  lost 1.3%.

January’s jobs report should show rising unemployment, falling job creation, and moderating wage growth, all of which will confirm that the Federal Reserve’s work to tame inflation is on track.

The report, due to be released Friday at 8:30 a.m. ET, comes just two days after the Fed’s latest interest-rate increase. If the employment numbers come in as expected, they could help this year’s stock market rally maintain its momentum.

Economists surveyed by FactSet expect that 185,000 jobs were created in January, as measured by nonfarm payrolls, marking a slowdown from 223,000 in December. The unemployment rate is estimated to be 3.6%, up from December’s 3.5%.

January's unemployment rate ticked downto the lowest level since 1969. Economistspredicted it would rise.Source: Labor Department.Note: Seasonally adjusted.

The Fed has lifted interest rates eight times in the past year, raising its targeted federal funds rate to a range of 4.5% to 4.75% in an effort to cool the worst bout of inflation in decades. As Fed Chair Jerome Powell reiterated in a press conference Wednesday afternoon, the U.S. central bank is keenly focused on inflation trends in the services sector, excluding housing. The labor market’s strength is key to those trends.

“Friday’s jobs report will be the next key data point for central bankers, particularly as it pertains to wage growth, which remains a stubborn component of inflation,” Brad Bernstein, a strategist at UBS Wealth Management, wrote in a note. “The Federal Reserve is focused on labor and wage data, as many components of the Consumer Price Index have already rolled over.”

Even as other signs suggest that inflation is slowing, a tight labor market has put pressure on the Fed to keep raising rates and maintain a hawkish monetary policy. Higher rates were a headwind for stocks in the past year. 

The U.S. central bank raised interest rates by a quarter of a percentage point on Wednesday—its smallest rate hike in almost a year—with Powell discussing “ongoing increases” ahead. The Fed chair referenced a still-tight labor market, but said he was encouraged by a moderation in wage growth.

Hourly earnings growth is expected to have remained flat on a monthly basis at 0.3%, according to economists’ estimates, with yearly growth decelerating to 4.3% from 4.6%.

“We’re playing closer attention to wage data as labor turnover dynamics have stagnated at elevated levels,” Andrew Patterson, a senior economist at Vanguard, said in a note. “Our attention (and the Fed’s) shifts to wages as we await definitive evidence that higher rates and slowing growth can offset structural labor supply issues and successfully push wage inflation down to a more comfortable territory.”

Investors will parse the details of the latest jobs report, even if it shows little change in labor conditions. Stocks rallied Wednesday and Thursday in the aftermath of the Fed decision and Powell’s press conference, partly on optimism that the Fed’s rate-hiking cycle may be nearing an end.

“It’s difficult to imagine any scenario wherein Friday’s release changes the Fed’s plans of a 25 basis-point hike in March and another in May,” said Vanguard’s Patterson. 

[dasari4kntr]

Full report...

 

https://www.bls.gov/news.release/empsit.nr0.htm

[mettastar]

So interest rate hike ippatlo aagadha

[anna_gari_maata]

Layoffs are thu thu mantram...

[dasari4kntr]

1 minute ago, mettastar said:

So interest rate hike ippatlo aagadha

lets wait till...FEB 14...

[Mr Mirchi]

Just now, dasari4kntr said:

lets wait till...FEB 14...

Valentines day dhaka na

[Ravi860]

Looks like layoffs are only in IT right now… strongest job market in 50years

interest rates ila ayithe thaggiyaru along with strong inflation combo 😅

[dasari4kntr]

6 minutes ago, Mr Mirchi said:

Valentines day dhaka na

CPI report...release date..

[csrcsr]

8 minutes ago, anna_gari_maata said:

Layoffs are thu thu mantram...

Tech work force is just 7% ata bro valaki main small business employment matters, tech lo jobs dobbina they don't care 

[megadheera]

Picha hot undi inka tech job market. Maa friend gadiki 3rd job confirm ayindi ninna. 

[veerigadu]

eee numbers dump gadi zamana lo vacchi unteee....repubs guddaluuuu chinchukoniiii capital hill meedha nangaaa dance sesetollu....

[futureofandhra]

6 minutes ago, megadheera said:

Picha hot undi inka tech job market. Maa friend gadiki 3rd job confirm ayindi ninna. 

gc?

[megadheera]

Just now, futureofandhra said:

gc?

H1B

[Vaampire]

7 minutes ago, megadheera said:

Picha hot undi inka tech job market. Maa friend gadiki 3rd job confirm ayindi ninna. 

I am looking for my 30th job. Plz help

[Cosmos]

19 minutes ago, megadheera said:

Picha hot undi inka tech job market. Maa friend gadiki 3rd job confirm ayindi ninna. 

Which tech ?