Morning Market Brief: February 6, 2024

US labour market shows little sign of slowing?

Last Friday, the US Bureau of Labor Statistics released data on the US labour market for the month of January. The data showed the labour market remains relatively robust, raising expectations the US Federal Reserve Board (Fed) could hold off lowering interest rates for some time still. The labour market has been a source of strength for the US economy, helping to lift households despite tight financial conditions.?

• The US economy added 353,000 jobs in January. This topped the 333,000 job additions in the previous month, and exceeded economists’ expectations of 185,000, based on a Bloomberg survey. January’s additions were the biggest since January 2023.
• Job additions were broad-based across several sectors of the economy. The business services, health care and retail trade industries added a high number of jobs over the month. The critical manufacturing sector also posted a rise in jobs in January.
• The US unemployment rate remained unchanged in January at 3.7%. While the US unemployment rate edged higher over 2023, it remains at relatively low levels on a historical basis, reflecting the overall strength in today’s labour market.
• As with most economic data releases, this report was diligently monitored by markets to predict when the Fed might begin lowering interest rates. Given the apparent strength in the US labour market, the Fed might begin reducing rates later in the year, but likely not in the short term.

In an interview aired Sunday night, Fed Chair Jerome Powell said that Americans might have to wait longer than the first quarter to see a reduction in interest rates. The Fed is looking for more signs that inflation will indeed fall to its 2% target. January’s labour market report added to expectations that rate decreases might happen later in 2024 and that the Fed will hold steady at its March meeting.

At?CIBC Private Wealth, we aim to take a comprehensive approach to managing, building and protecting your wealth. If you'd like to discuss this market and economic update in more detail, please get in touch with your advisor any time.