‘The lack of wage growth suggests further room for tightening in the labor market. So long as that remains true, and with inflation still below target, the Fed will be content to hold off on further interest rate hikes’. – Anthony Nieves, ISM
US companies created more jobs than expected last month, following the disappointing December figure. The Bureau of Labor Statistics revealed on Friday that nonfarm payrolls rose 227,000 in January, compared with the preceding month’s upwardly revised 157,000, while market analysts anticipated an increase to 170,000 in the reported month. Meanwhile, the unemployment rate came in at 4.8% last month, up from December’s reading of 4.7%. Friday’s data also showed that average hourly earnings grew 0.1% in January, following the prior month’s downwardly revised 0.2% and falling behind the 0.3% rise market forecast. Earlier this week, the Federal Reserve declined to raise interest rates. However, policymakers maintained their projection of three hikes in 2017. Separately, the Institute of Supply Management reported its Non-Manufacturing Purchasing Managers’ Index fell to 56.5 in January from the preceding month’s 57.2, whereas analysts penciled in a slight decrease to 57.0 points. Overall, the slight decrease in the headline Index was mainly driven by the weaker New Orders Index, which dropped to 58.6 from 60.7 in the previous month; however, order backlogs held on the same level. Moreover, the ISM said the Employment Index advanced to 54.7, while the Price Index surged to 59.0 from 56.0, representing an increase in inflationary pressures.