The national employment rate fell to just 3.4% — its lowest level since May 1969.
US stocks initially turned lower after the January jobs report was published, with the Dow Jones Industrial Average, the tech-heavy Nasdaq and the broad-based S&P 500 all trading in negative territory. By late Friday morning, the Dow had pared earlier losses and turned positive.
“The undeniably strong report is what markets hope for coming out of a recession, but not what you want to see when expectations for the end of the Fed rate hike campaign is suddenly challenged by significantly stronger labor market,” said Quincy Krosby, chief global strategist at LPL Financial.The strong jobs report could fuel anxiety among recession-wary investors who have called on the Fed to pause its inflation-fighting campaign. Inflation hovered at 6.
“We now think the Fed is more likely than not to hike in March,” Pantheon Macroeconomics chief economist Ian Shepherdson said in a note to clients on Friday. Earlier this week, the Fed hiked its benchmark interest rate by a quarter percentage point, its eighth straight increase but its smallest in nearly a year. The rate-making Federal Open Market Committee, which meets again next month, said it expected “ongoing increases” in interest rates.
Fed Chair Jerome Powell noted that the “disinflation process” has begun but stressed that officials would need more signs of a sustained downturn in prices before they will consider a policy pause.
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