Upbeat US January labor data add to signals that the economy remains resilient

US Nonfarm payrolls increased by 353,000 jobs in January, from upwardly revised December’s figure at 333,000 and strongly beating forecasts for 180,000 increase.

Strong acceleration in job growth last month was mainly driven by resilient economy, which encouraged businesses to hire more, as fears of recession faded, and outlook is getting brighter.

Average hourly earnings increased 0.6% in January after rising 0.4% in December, while annualized figure showed that wages increased 4.5% in January, after advancing 4.3% previous month.

Unemployment was unchanged at 3.7% but beat expectations for 3.8% rise.

Although labor market momentum has slowed compared to 2022, mainly due to strong rise in interest rates, job gains are more than sufficient to sustain the economy through strong consumer spending.

Upbeat labor data would contribute to Fed’s action in the near future, as the central bank remains cautious and sidelined expectations for rate cut as early as March.

Solid labor numbers add to other relatively positive economic data, which signal that the economy is in quite good condition and the Fed will have less fears to keep interest rates at current levels until being sure that inflation is moving towards 2% target.