The US Job Market Stayed Firm Last Month As The Fed Watched On

The US Job Market Stayed Firm Last Month As The Fed Watched On
Paul Allison, CFA

21 days ago1 min

What’s going on here?

US employment data showed that the job market stayed firm in January, a release that will dominate the Federal Reserve’s (the Fed) decision-making.

What does this mean?

Believe it or not, many economics enthusiasts compromise precious hours of their Friday and Saturday to run through nonfarm payroll figures – and if you’re reading this, you're included. In fairness, though, this one was worth missing the first pint at the pub for. The US filled 353,000 jobs in January, and with companies competing for top talent, they pushed the average wage up a more-than-expected 4.5% over the month. Good news: that means more money in Americans’ pockets. Bad news: that means they can keep up with higher prices, potentially stoking inflation just when it seems to be calming down.

US jobs

Why should I care?

For markets: In one ear, out in the markets.

The Fed has plainly said not to expect an interest rate cut anytime soon. Investors seem to think they know better, though, sticking to their predictions of six interest rate cuts this year. But they might want to heed the warning: interest rates are still wearing down inflation, and with the economy and job market holding up, there’s no reason for the Fed to rush to grab the scissors.

The bigger picture: Every little counts.

S&P 500 businesses managed to make 1% more profit last year than the one before. That’s a small but mighty feat in this economy, not least because interest rates have been making it more expensive for companies to invest in themselves. What’s more, analysts are now expecting US firms to bring up profit another 12% this year, a performance that would prove the country’s companies are tougher than steel. Or at least, interest rate hikes.

SP500 earnings growth
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