The latest US job data are surprising in their solidity: the message is clear for the Fed. The rate cuts for 2024 are not an option.
New signals for the Fed - and for the markets - after the publication of data on US jobs.
U.S. stock index futures extended declines after a better-than-expected jobs report signaled job resilience, dampening hopes for interest rate cuts next year.
The results on the US unemployment rate and non-farm payrolls are being watched with great interest by the central bank. A sharp slowdown in these data indicates that the increase in interest rates is working, fueling a necessary weakness to slow down prices. Conversely, robust numbers translate into the presence of space for the Fed to raise rates further (or in any case not to lower them).
US employment is booming. Fed rate cuts can wait
Job creation showed few signs of slowing in November, with wages growing even faster than expected and the unemployment rate falling despite signs of a weakening economy.
nonfarm payrolls rose by a seasonally adjusted 199,000 on the month, slightly better than the Dow Jones estimate of 190,000 and up from October’s gain of 150,000, the Labor Department reported Friday.
The unemployment rate fell to 3.7%, from the expected 3.9%, while the labor force participation rate rose to 62.8%.
The report comes at a critical time for the American economy. Although growth has defied widespread expectations of a recession this year, most economists expect a sharp slowdown in the fourth quarter and modest improvements in 2024.
The greatest attention, however, is towards the Fed, which reads these data very scrupulously. The US central bank is expected to keep rates unchanged on December 13. It raised the key rate by 525 basis points, to the current range of 5.25%-5.50%, from March 2022.
President Jerome Powell has repeatedly pushed back against growing bets of rate cuts early next year, stressing that policymakers will move cautiously but maintain the possibility of raising rates again. These employment data confirm the utmost prudence of the Fed. And they still leave the different scenarios on the cost of money open.
Original article published on Money.it Italy 2023-12-08 15:30:20. Original title: Fed, perché il taglio dei tassi si allontana dopo questi dati Usa
