U.S. Job Growth Slows in January

(Reuters) – U.S. job growth slowed more than expected in January, likely restrained by wildfires in California and cold weather across much of the country. However, a 4.0% unemployment rate likely provides the Federal Reserve with the rationale to postpone interest rate cuts at least until June.

Nonfarm payrolls increased by 143,000 jobs last month after a revised rise of 307,000 in December, according to the Labor Department on Friday. The moderation in job gains follows December’s strong performance, as economists anticipated an establishment survey showing 170,000 jobs added.

MARKET REACTION:

• STOCKS: S&P 500 E-minis steadied, down 0.03%, indicating a flat opening on Wall Street.
• BONDS: The yield on benchmark U.S. 10-year notes rose to 4.473%, and the two-year note yield increased to 4.254%.
• FOREX: The dollar index inched up by 0.2% whereas the euro experienced a slight decline of 0.2%.

COMMENTS:

ADAM SARHAN, CHIEF EXECUTIVE, 50 PARK INVESTMENTS, NEW YORK

“Futures are pretty much where they were before the news came out. The jobs report wasn’t too hot or too cold… this allows the market to breathe a sigh of relief. No news is good news for the market at this stage. The market is extremely resilient given the political, economic, and earnings landscape.”

WASIF LATIF, PRESIDENT AND CHIEF INVESTMENT OFFICER, SARMAYA PARTNERS, PRINCETON, NEW JERSEY

“It seems like a mixed bag; the non-farm payroll number is lower than expected, but December’s revision is positive. There’s a drop in unemployment and an increase in average hourly earnings. Normally, a one-sided report prompts immediate market reaction, but the current mixed signals are keeping the market stable.”

PETER CARDILLO, CHIEF MARKET ECONOMIST, SPARTAN CAPITAL SECURITIES, NEW YORK

“The non-farm job numbers were less than expected, but the revision to December’s numbers mitigates that. Rising hourly wages raise inflation concerns, suggesting the Fed will maintain a wait-and-see approach. This won’t severely impact stocks, but the dollar is strengthening, and 10-year Treasury yields are rising.”

LINDSAY ROSNER, HEAD OF MULTI SECTOR FIXED INCOME INVESTING, GOLDMAN SACHS ASSET MANAGEMENT

“A mixed report: weak headline NFP with a downside miss, but a positive prior revision and unemployment down to 4%. This month’s data was impacted by one-off factors such as wildfires and cold weather. The Fed is likely to remain cautious in interpreting today’s results.”

BRIAN JACOBSEN, CHIEF ECONOMIST, ANNEX WEALTH MANAGEMENT, MENOMONEE FALLS, WISCONSIN

“Revisions complicate the interpretation of data. The payroll gain appears decent following significant job growth in past months. Factors such as severe cold weather and wildfires likely influenced results. Education and healthcare continue to drive gains, while federal employment may see a decline. The Fed may prioritize employment over inflation approaching their March meeting.”