U.S. employment unexpectedly surged in January, wages surged and a strong jobs report once again weighed on expectations for a Fed rate cut in March.
On Friday, February 2, the U.S. Bureau of Labor Statistics released data showing that:United StatesNon-farm payrolls increased in January10,000 people, not only much higher than generally expected10,000 people, and above all analysts' expectationsThe number of monthly payrolls increased from 21 previously60,000 people revised up to 33310,000 people
Job growth was mainly in professional and business services, health care, retail** and social assistance. Employment in mining, quarrying, and oil and gas extraction industries declined.
The number of new non-farm payrolls in November rose from 1730,000 people were revised up to 1820,000 people; The number of new non-farm payrolls in December fell from 2160,000 people revised up to 3330,000 people. As a result of these revisions, the number of new jobs added in November and December combined increased by 12 compared to the pre-revision period60,000 people.
The chart below shows that in the past year, the non-farm payrolls exceeded or fell short of expectations, and it can be seen that most of the time it exceeded expectations, or even exceeded by a large margin
The average hourly wage growth rate in the United States in January reached 45%, the highest since March 2022 and higher than the expected 41%, and the wage growth rate in December increased by 41% revised upwards to 43%, with a month-on-month growth rate of 06%, which is 03% is twice as much. The average weekly working week for nonfarm payrolls fell by 02 hours to 341 hour, down 05 hours, down to the lowest level during the worst of the coronavirus crisis.
The significant increase in hourly wages may be due to a reduction in working hours. The survey week for the January jobs report coincided with severe winter weather that disrupted economic activity in many parts of the U.S., including bitter cold in Texas, heavy snow in the Midwest and flooding in the Northeast. More than 500,000 employees were unable to work due to inclement weather, the highest number in nearly three years.
Nevertheless, the analysis points out that wage growth is difficult to slow down, which is not good news for the Fed, meaning that inflation may not cool down.
The unemployment rate reached 37%, below market expectations of 38%, and the number of unemployed remained at 6.1 million, little changed.
The labor force participation rate remained at 62 in January5% level.
It is also worth mentioning that there is a significant difference between the two parts of the non-farm payrolls report, the institutional survey and the household survey. This is despite the fact that institutional surveys show an increase of 35 percent in employment30,000, but the household survey reported a decrease of 310,000 people.
The Nonfarm Payrolls report consists of two parts: the establishment survey and the household survey. Institutional surveys focus primarily on employment data in enterprises and sectors, while household surveys collect employment through surveys of individual family members. These two survey methods provide information on the job market from different angles.
After the release of the non-farm payrolls data, traders lowered their expectations for the Fed to cut interest rates. The probability of a rate cut at the Fed's March meeting is about 20%. The market has also lowered its expectations for the number of rate cuts this year, with about five more rate cuts expected this year.
The U.S. non-farm payrolls data exploded, and the market reacted violently:
The yield on the five-year U.S. Treasury rose about 14 basis points to 3977%；The yield on the two-year U.S. Treasury rose about 16 basis points to 4395%；The yield on the 10-year U.S. Treasury note rose about 10 basis points to 4006%。Ahead of Friday's non-farm payrolls report, recent employment data broadly showed a gradual cooling of the U.S. labor market, slower wage growth and a slower pace of hiring. A large portion of last year's hiring came from three departments: Healthcare and Restaurants & Hotels. Other sectors have returned to slower growth rates.U.S. stocks** moved lower, and the Nasdaq 100** narrowed its gains to 03%, the S&P 500** is close to turning lower, and the Dow** is down 035%。
The spot ** decline extended to more than 1% to 2032$72 oz; Spot ** fell by 25% at 22$58 oz.
The U.S. dollar index rose more than 80 points to 10381。
Since the start of the pandemic, January's jobs report has been a bit difficult**. Over the past two years, job growth has been much higher than economists had expected, and there has been speculation that changes in seasonal hiring patterns may have overstated employment figures. In addition, annual revisions to population estimates may also make it difficult to compare January's unemployment rate with last year's data.
Goldman Sachs asset management analyst Lindsay Rosner said that the US labor market data for January was very strong, and Powell's "crushing" expectations for a rate cut in March looked completely reasonable, and it should also be noted that the wage growth rate was revised upward in December, and the market should remain cautious and patient about rate cuts.
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