US January jobs report is amazingly good

During normal economic times — that is, over the past 20 or so years with low inflation, moderate unemployment, and slow growth — January’s job numbers should be a reason to celebrate. No matter which angle you look at it, the report sparkles: Employment increased by 517,000 – almost three times what analysts expected. The unemployment rate is 3.4% — the lowest in more than 50 years. Hourly pay increase was 0.3% — steady, but still moderate compared to the rest of the year.

However, the market fell on the news. On Friday, the S&P 500 fell 1.04% to 4,136.48, the Nasdaq Composite lost its hot streak and fell 1.59% and the Dow Jones Industrial Average fell 0.38%. That’s right, the indexes may have reacted to earnings: Apple, Alphabet and Amazon, combined with a market capitalization of nearly $5 trillion, reported fourth-quarter results with plenty of flaws. than success. Investors’ disappointment was reflected in the companies’ share prices (although it should be noted that Apple’s stock actually rose 2% after an early loss), so this has had an impact. move back the indexes.

However, the most important thing on investors’ minds should definitely be how the jobs report will affect the Federal Reserve’s interest rate trajectory. Central banks have repeatedly emphasized that they are looking at economic data to determine how far the gains are. The question is: What data sets are they prioritizing? We know that inflation, consumption and production numbers fell in December. But January’s jobs report paints a picture of an incredibly strong labor market that could keep inflation in line. continued at a high level, especially in the service sector, which had the biggest increase last month. Fed Chairman Jerome Powell said he was focusing on the labor market, which he described in his post-meeting news conference on Wednesday as “out of balance.” Investors betting on a pause or swing in interest rates could also be forced by the Fed to find a new equilibrium.