Tags: FED, NFP, Payroll, Powell, Unemployment Rate
Last Friday, data from the U.S. Bureau of Labor Statistics showed that the U.S. economy added more jobs than expected in December, and this increases chances of the Federal Reserve not lowering interest rates during its next policy meeting.
The jobs market created 256,000 new jobs in December which is greater than the economists’ expectation of 160,000. The number for November was however revised downwards to 212,000. The unemployment rate also improved to 4.1% from expectations of 4.2%. Against the background of the increase in the proportion of employed in the U.S. to the working-age population, growth in average hourly earnings of 0.3% was recorded in December after a higher appraisal of 0.4% in November. Wages grew by over the year by 3.9%, somewhat moderate than in November where there was an increase of 4 percent.
(Source: U.S. Non-Farm Payrolls Data, LSEG DataStream)
The strong December payroll statistics reduce the need for the Federal Reserve to raise interest rates substantially more than the previous meeting minutes suggested. The U.S. rate futures market fully priced in a pause in the Fed’s easing cycle for the January meeting, after publication of data, according to LSEG estimates. The current expectations are only 27 basis points (bps) of easing further in 2025 which amounts to one rate cut with the first during the June meeting.
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