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US payroll numbers hotter than expected

A 50 bps hike from the Fed is now a little more likely

10 March 2023

The February nonfarm payrolls in the US released today was possibly going to be the clearest signal to markets about upcoming Federal Reserve (Fed) policy regarding rate increases. Expectations were for a monthly gain of 225k but we saw a hotter number of 311k, putting the Fed in a more difficult position. Had it been softer, a 25 bps increase would have been likely but this hotter employment print, along with average hourly earnings rising 4.6% year-on-year, signals that the inflationary dynamics in the US are far from being beaten. A 50 bps hike is now a little more likely but until we get the CPI print next week, this is not fully nailed on yet.

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Charles Hepworth

Investment Director
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