05 January 2024
If you are covering the latest US employment statistics, please find below a comment from Stuart Clark, portfolio manager at Quilter Investors:
“The US employment market continues to prove its robustness in the face of growing economic challenges, with today’s nonfarm payrolls comfortably beating expectations. This comes on the back of other strong employment data this week in the US, and highlights just why the Federal Reserve changed its messaging slightly this week to dampen down any hope of rate cuts in the early part of this year.
“Ultimately, the Fed has done a solid job to date engineering this scenario where inflation has come down significantly and the economy keeps on confounding expectations. However, the longer this goes on the more difficult the job becomes as it will be incredibly aware that acting too soon with rate cuts could bring on a new bout of inflation. For now, the risk of acting too late or having done too much to date isn’t materialising but things can and do change quickly.
“This report will likely add to the slightly nervy sentiment we have kicked the year off with. The desire for rate cuts from market participants is clear given the expectations this year, which have felt rather toppy, but this report will shift sentiment considerably and result in somewhat of a realisation that higher for longer really is the scenario we are entering.
“With the Presidential election campaign likely to kick off in earnest soon, the Fed’s job of remaining impartial will get increasingly challenged the closer we get to that November date. If the economy continues to run hot, will it want to be cutting significantly in the second half of the year? That remains to be seen.”
