The Nonfarm Payrolls (NFP) report is closely monitored markets as it provides insights into the overall health of the labour market. It is a key economic indicator and influences decisions related to monetary policy.
Nonfarm Payrolls data for December increased by 216,000, showing strong growth and surpassing expectations across the board. Data for the previous two months were revised downwards worth 71,000 – still substantial. This robust performance, reflected in steady unemployment (remained at 3.7%) and rising wages, indicates economic strength. The jobs data is a crucial metric for the Fed as it considers when to lower rates and this data suggests that the Fed cutting as early as March is likely premature.
This report isn’t good news for equity investors that desire lower interest rates and worse data. Expectations of cuts as early as March by the Fed played a big role in stock and bond rally towards the end of the year. Since the Fed minutes released on Wednesday, with the ‘high for longer’ stance these investors have since revised their forecasts.
The combination of low unemployment, sticky wages and ongoing job creation shows the jobs market remains tight. Next week’s inflation data will give markets more guidance on the Fed’s next move
The dollar hit 103.10 after stronger-than-expected U.S. jobs report.
U.S. Treasury 10-year yield rose to 4.063% after the report.