Source: Economics Group of Wells Fargo Bank, N.A.
Summary
The 143K rise in nonfarm payroll employment in January came in a little light of expectations, but upward revisions to recent months’ hiring and a decline in the unemployment rate to an eight-month low of 4.0% show the labor market remains on solid footing.
On balance, today’s employment data, which included annual revisions, should give the FOMC confidence that it can maintain the federal funds rate at its current level for the foreseeable future. A small swoon in the labor market occurred throughout the first half of 2024 as nonfarm payroll growth slowed sharply and the unemployment rate ground modestly higher. But, the more recent data are indicative of a labor market that has regained its footing. This suggests that the tail risk of a sharp deterioration in the labor market has diminished, and as a result the FOMC can wait to see how the Q1 inflation data and economic policymaking play out before taking further action on the federal funds rate.