The US labor market presented a mixed bag of results in January, reflecting both strength and mild softening. The latest payrolls report revealed that the number of jobs created fell short of expectations, coming in at 143,000 compared to the anticipated 175,000. This figure was also revised lower from an initial estimate of a 186,000 increase to a revised 166,000. Despite these lower-than-expected gains, the unemployment rate experienced a slight decrease, falling to 4% from 4.1%. Meanwhile, average wage data surprised the market with a monthly jump of 0.5%, bringing it to an annual increase of 4.1%, defying expectations of a decline to 3.8%.
In contrast to January's subdued job creation, the December jobs figure was revised upwards significantly from 256,000 to 307,000. This adjustment, along with similar upward revisions for November, underscores the resilience of the US labor market. However, these figures also highlight a mild softening trend that has begun to emerge.
The government sector contributed to the job growth by creating 32,000 jobs last month. This figure remains consistent with the average monthly increase of 38,000 over the past year. Despite these developments, analysts suggest that the latest labor market data does not warrant any immediate policy shifts from the Federal Reserve.
Financial markets responded with varied reactions to the payrolls data. S&P 500 futures indicated a slightly higher open later in the afternoon, reflecting cautious optimism among investors. US Treasury yields rose across the curve, suggesting potential support for the dollar later on Friday. The dollar index remained higher on the day, although it surrendered a fraction of its gains earlier.
Commodity markets also experienced fluctuations in response to the news. Gold prices climbed higher but retreated from an intraday peak of $2,870. Oil prices, on the other hand, pulled back from their daily highs but remained buoyant as they attempted to recoup some of the week's losses. A level of $74.10 is emerging as a key support point for oil.