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Strong Jobs Report Supports Fed Pause

Oku Markets

Currency Management for Businesses and Private Clients

发布日期: 2025年2月10日

Another round of tariff headlines late on Friday rather overshadowed January's US jobs report, though the figures nonetheless show things continuing to tick along in the labour market.

While headline nonfarm payrolls rose?+143k in January (just off my own guess of?+145k!), it was the net upward revision of?+100k to the prior two months' prints which was perhaps of more importance, as this in turn saw the 3-month moving average of job gains rise to?+237k, its highest level in almost two years, and certainly nothing to complain about.

Meanwhile, unemployment unexpectedly fell to 4.0%, even as participation rose to 62.6% - i.e., more people in employment, and more people in the labour force seeking employment, a 'best of both worlds' scenario. Some concern, though, was expressed over average hourly earnings having risen 0.5% MoM, and by 4.1% YoY, though both of these increases were likely due to a shorter workweek owing to the California wildfires, and don't suggest a significant intensification in wage pressures, meaning that the FOMC's assertion that the labour market is not a significant source of upside inflation risk continues to hold true.

In fact, in many ways, it was a 'goldilocks' jobs report, which showed that the US labour market started 2025 by maintaining the solid momentum with which it ended 2024. For Fed policy, though, the report heightens the chances that January's 'skip' becomes a more prolonged 'pause'. Chair Powell himself noted that policymakers need to see either "real" inflation progress or "some" labour market weakness in order to deliver another rate cut. While our latest check-up on inflation comes this week, Friday's jobs report didn't really point to any labour market weakness, let alone "some". Hence the FOMC seem likely to remain a hawkish outlier among G10 central banks for the time being, providing another tailwind to the dollar in the process.