- The US added 216,000 jobs in December, against expectations of 170,000 and down from 199,000 in November
- Unemployment rate holds steady at 3.7%
- Could push Federal Reserve interest rate cuts further out
Sophie Lund-Yates, lead equity analyst, Hargreaves Lansdown:
“There are a few vital signs officials can monitor when trying to diagnose the health of the economy, and the labour market is a crucial one. Developments show that the US labour market isn’t losing steam, ultimately suggesting that economic activity will need a heavier hand to slow it down. That could see interest rate cuts across the pond pushed further out than hoped – bad news for the market, which until recently was pricing in heavy cuts this year.
The data has short-term implications, but the bigger question looks to the future. The resilience shown by the US labour market has been markedly stronger than predicted, which makes bringing things in line without triggering a rock-hard landing becomes a much more delicate task. 2023 overall was a bumper year for the labour market, and the overall temperature is still too hot to be fully comfortable. There’s every chance the Federal Reserve will demand a run of softer macro readings before hitting the rewind button on rates. It shouldn’t be forgotten that the rate of labour growth is slowing, which is a step in the right direction, but there’s work to be done.”
