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US employment numbers far exceed forecasts

Stronger-than-expected jobs market likely to push any prospect of Fed rate cut into the second quarter.

02 February 2024

The latest US employment figures smashed through all expectations today, with US January non-farm payrolls rising to 353,000 month-on-month, the biggest gain in 12 months, versus forecasts of a 185,000 gain. Revisions on previous months were also marked higher. Average hourly earnings rose 0.6% versus forecasts of a 0.3% gain, so this gives an issue for the Federal Reserve in their inflation fight and will not give them the confidence they stated they need to begin cutting rates.

If anyone still had any lingering hopes for a March rate cut, I think you can now scrap that idea completely. Employment gains across healthcare, retail and services were partly offset by weakness in mining and the oil industry but these numbers are in no way indicating a softening in the labour market. This is still an economy that is running if not hot, then pretty warm.

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Charles Hepworth

Investment Director
My Insights

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