The US non-farm payroll data in January is mixed, will the Fed continue to wait and see?

A report released by the US Bureau of Labor Statistics on Friday showed that nonfarm payroll employment increased by 143,000 in January, revised down from a previously reported increase of 307,000 in December. The Bureau of Labor Statistics stated that the wildfires in Los Angeles and severe winter weather in other parts of the US had "no discernible effect" on employment this month. Job growth in the US slowed down in January, as annual revised data from the government showed that the labor market last year was less dynamic than previously expected. The addition of 143,000 jobs in January was below economists' expectations of 170,000 jobs and also below the 307,000 jobs added in December. The monthly job growth in December was revised up from the previous 256,000 jobs added. Additionally, the monthly job growth data for November was also revised up. In November and December, the US labor market added 100,000 more jobs than originally estimated. The January wage growth, an important indicator of inflation pressure, increased by 4.1% compared to the same period last year, higher than the 3.9% in December and economists' expectations of 3.8%. Calculated monthly, wage growth was at 0.5%, higher than the 0.3% increase in the previous month. Meanwhile, the labor force participation rate increased from 62.5% to 62.6%. The government revises benchmark data annually, showing that on average, job growth last year was 166,000 jobs per month, slightly slower than the originally reported 186,000 jobs. The Bureau of Labor Statistics uses records from the unemployment insurance tax system and adjusts its previously reported employment figures based on business openings and closures. The unemployment rate stands at 4.0%, with the survey used to generate this number including specific revisions to reflect new population estimates at the beginning of the year, making it not directly comparable to the previous months. The changes in January employment data and the latest data from early 2023 show that the labor market is slowing down but healthy, continuing to drive economic growth without creating inflationary pressure. This helps explain why Federal Reserve policymakers, after three rate cuts last year, have indicated a reluctance to further lower borrowing costs. Steve Sosnick, Chief Strategist at Interactive Brokers, said that the report indicates that "people have jobs. Most people who want jobs have them, and those who have jobs are making more money," and "this won't incentivize the Fed to take action right now." Officials are also grappling with diminishing inflation and uncertainty surrounding President Donald Trump's new policies. While Fed Chair Jerome Powell recently described the job market as "quite stable," he and his colleagues have repeatedly expressed their desire not to see further cooling in the job market. After the report was released, stock index futures and US Treasury yields rose, while the US dollar fluctuated. Job growth in January was primarily driven by healthcare, retail trade, and government sectors. Employment in mining, quarrying, oil and gas extraction, temporary help services, and motor vehicle manufacturing declined. While the Bureau of Labor Statistics stated that weather had little impact on the January data, nearly 600,000 people were unable to work last month due to severe weather, the highest in four years. Additionally, 1.2 million people who typically work full-time could only find part-time work due to weather conditions. This also had an impact on work hours, which fell to the lowest level since the outbreak of the pandemic. Meanwhile, hourly wages rose by 0.5%.