'Red hot' US Payrolls report pushes back Fed cut to 'at least' summer
Today’s payrolls report suggests that the period of US economic exceptionalism is likely to continue for a little while yet. January job creation missed estimates, although this was more than offset by a large upward revision to the December print, while the unemployment rate also unexpectedly fell to its lowest level since May.
Without question, however, the most eye-catching aspect of the data was the blowout earnings figures, with monthly wages jumping by the most since June 2023.
The red hot wage growth numbers will be a major cause for concern for the Federal Reserve, as it is likely to make it increasingly challenging for officials to hit their elusive 2% target, particularly with Trump’s tariffs looming in the background.
We are subsequently almost entirely ruling out the possibility of another FOMC rate cut until at least the summer, which should present a favourable environment for the US dollar in the coming months.
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