The latest non-agricultural report in the United States shows that the job market is beginning to move in the direction the Federal Reserve (Fed) hoped. The growth of wages and employment has slowed down. The chances of a soft landing for the U.S. economy have increased. A hawkish stance, urging continued interest rate hikes to complete the task of suppressing inflation.
Data from the U.S. Department of Labor on Friday (6th) showed that non-agricultural employment in the U.S. increased by 223,000 in December last year, higher than market forecasts, the unemployment rate fell to 3.5%, and average hourly wages increased by 4.6% annually, both of which were worse than the market expected.
December non-farm payrolls report data:
- U.S. non-agricultural employment reported 223,000 in December, 200,000 expected, 256,000 previously revised
- U.S. unemployment rate reported at 3.5% in December, 3.7% expected, 3.6% previously
- The average weekly working hours in the United States in December was 34.3 hours, expected 34.4 hours, and the previous value was 34.4 hours
- U.S. average hourly wages rose 4.6% in December, vs. 5.0% expected and 4.8% previously
- U.S. average hourly wages rose 0.3% in December, compared with 0.4% expected and 0.4% previously
- U.S. December labor force participation rate reported at 62.3%, expected 62.2%, previous value 62.2%
Previously, Federal Reserve Chairman Jerome Powell has repeatedly declared his determination to curb inflation, which is bound to break the spiral of inflation and wages. Therefore, it is expected that “wages” will be the core of the Fed’s monetary policy this year.
Nick Timiraos, a Wall Street Journal reporter who is widely recognized by the market as the Fed’s megaphone, commented on Friday that compared with the November report, the average hourly earnings data paint a slightly less worrisome wage picture for the Fed.
Simona Mocuta, senior economist at State Street Global Advisors, said optimistically: “The non-farm payroll report reflects a ‘soft landing’, and the United States can have a strong labor market even as wage growth slows. Ideally, this should allow the Fed to will slow down and pause rate hikes soon.”
Traders see the non-farm payrolls report as evidence that the Fed’s task of fighting inflation is about to be completed. According to CME’s FedWatch tool, traders expect the Fed to raise interest rates by 1 yard in February and keep the terminal interest rate at There’s a 75% chance of just under 5%.
U.S. stocks rebounded strongly on Friday, marking their best performance in more than a month, as U.S. bond yields fell, amid expectations that the Fed would not have to expand its fight against inflation.dollar indexweakened.
However, Fed officials took a decidedly more sober view of the non-farm payrolls report on Friday, sticking to their hawkish stance and wanting to see more data confirming that price pressures have eased before stopping tightening.
Federal Reserve Bank of Atlanta President Raphael Bostic said on Friday that he expects the policy rate to hit a range of just above 5.00% this year and maintain it through 2024, and he expects a rate hike of one or two yards next month. Be open minded.
“I’m comfortable with either a 2 or 1 rate hike at the moment, and if I start to hear signs that the labor market is starting to ease in terms of tightening, then I might be more inclined to 1,” Postik said. If that continues to slow gradually, we need to pivot.” He added: “I personally don’t see wages as a driver of inflation.”
Richmond Fed President Thomas Barkin also stressed on Friday that the Fed still has work to do to bring price increases back to the Fed’s 2 percent target.
Fed Governor Cook (Lisa Cook) said that there are several signs that inflationary pressures are easing, including a slowdown in wage growth, but that inflation is currently above the Fed’s 2% target, which is still very worrying.
Investors will be waiting for more inflation data next week, with the Consumer Price Index (CPI) expected to show that price pressures have weakened further in December, expected to fall to 6.5 percent from 7.1 percent in November, on track to hit 14. lowest in the month.