US labour growth unexpectedly accelerated in January – NFP

The US January labor report, released on Wednesday, showed unexpected acceleration in job growth and lower unemployment, that provides temporary relief to the Fed.

Better than expected January numbers signal that the central bank may hold interest rates for some time while closely monitoring inflation.

Nonfarm payrolls report showed that US labor sector added 130K new jobs in January compared to a rise of 48K in December (downwardly revised from 50K) and strongly beat expectations for 66K increase.

Meanwhile, unemployment unexpectedly dropped to 4.3% last month from 4.4% in December and forecast for unchanged figure.

Although better than expected January data boost optimism, the situation in labor market remains fragile, as Trump’s administration trade and immigration policies continue to weigh and offset positive impact from robust economic growth.

Economists remain cautiously optimistic and expect the administration to cut tax that would boost hiring this year.

The US dollar strengthened across the board in immediate reaction to solid labor numbers, but firmer direction signals could be expected once the markets digest data.