Investment Clock insights

US payrolls keep Fed on track to hike again in March


5 January 2018

Ian Kernohan

There was something for everyone in the latest US Labour Market Report. On the one hand, employment growth slipped below 200,000 after a couple of strong months, while on the other, the headline rate of unemployment remained very low at just 4.1%, on an unchanged participation rate.  Wage growth ticked higher to 2.5%; still a very modest rate despite the sharp fall in unemployment over the past few years. 
The US Federal Reserve (Fed) puts much more weight on labour market data than on any other information, including the volatile and often misleading early estimates for GDP.  Most survey based indicators of economic growth are strong in the US, and while the current severe weather is bound to impact economic activity in Q1, the Fed tend to look through these events, and are still on track to raise interest rates once again in March.

There was something for everyone in the latest US Labour Market Report. On the one hand, employment growth slipped below 200,000 after a couple of strong months, while on the other, the headline rate of unemployment remained very low at just 4.1%, on an unchanged participation rate. Wage growth ticked higher to 2.5%; still a very modest rate despite the sharp fall in unemployment over the past few years.

The US Federal Reserve (Fed) puts much more weight on labour market data than on any other information, including the volatile and often misleading early estimates for GDP.  Most survey based indicators of economic growth are strong in the US, and while the current severe weather is bound to impact economic activity in Q1, the Fed tend to look through these events, and are still on track to raise interest rates once again in March.

The value of investments and the income from them is not guaranteed and may go down as well as up and investors may not get back the amount originally invested. The views expressed are the author’s own and do not constitute investment advice.