‘Stunning’ US jobs growth of 353,000 far outstrips estimates

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The US economy added 353,000 jobs in January, almost twice as many than forecast, in “stunning” numbers that led investors to rein in expectations of interest rate cuts.

Economists had predicted a 180,000 increase for last month, according to an LSEG survey.

Tom Simons, US economist at Jefferies, described the figures as “stunning numbers” that left him “near speechless” and made a rate cut in March “unthinkable”.

He added: “I had expected we would see strong headline numbers, but the supporting, underlying data were also extremely strong.”

Treasury yields jumped as previous expectations of early rate cuts were dashed by the labour market’s strength. The S&P 500 edged up about 0.2 per cent as it opened for trading on Friday.

Stephen Stanley, chief US economist at Santander, said that although the 353,000 figure was “exaggerated by seasonality”, the data was “strong across the board”.

The two-year Treasury yield, which moves with interest rate expectations, built on earlier gains, rising 0.17 percentage points on the day to 4.36 per cent. 

Futures traders scaled back bets that the US Federal Reserve would cut interest rates in March. Following the jobs numbers, expectations of a cut were around 19 per cent, compared to 37 per cent before the report.

Fed chief Jay Powell sought earlier in the week to cool speculation about a March rate cut, warning that it was not the central bank’s “base case.”

Traders also took off bets on an interest-rate cut in May after Friday’s job figures, putting the odds at around 88 per cent. Before the report, a cut in May had been fully priced in.

Revised figures in Friday’s jobs report showed that the US had also added many more jobs in…