The findings give the Federal Reserve the opportunity to cut interest rates at a more leisurely pace.
The number of jobs is predicted to be around 170,000 and below the yearly average of 166,000 jobs in 2024. Boussour characterized the labor market as “frozen, but robust.”
Business leaders are still requesting fewer new faces, but most are cautious and have not dismissed employees yet, as they consider the unstable economy and policy changes.”
In January, the healthcare, retail, and social assistance sectors saw the largest increases in employment, each adding at least 22,000 new jobs. In contrast, the extraction industries for mining, quarrying, oil, and gas experienced a decline in employment, with 8,000 fewer jobs in January compared to the previous month, following a relatively stable December 2024.
Federal Reserve Chairman Jerome Powell. Photo by Yasin Ozturk/Anadolu Images.
In January, the private sector created 111,000 new jobs. Meanwhile, government roles jumped by 32,000. Additionally, average private sector wages went up to $35.87, an increase of just 17 cents compared to the previous month, while the typical workweek dropped by 0.1 hours to about 34.1 hours.
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“Facing a Tough Job Market”: Approximately 1.7 million individuals have been actively searching for employment for a period of six months or more.
Boussour forecasts that the number of jobs created each month will likely be lower than the 166,000 average seen in the past year, and the jobless rate is expected to rise towards 4.4% due to increased business layoffs.
She suggests the Federal Reserve will be more hesitant in its response to the January jobs report and possibly reduce the frequency of interest rate decreases.
According to Bousssour, Federal Reserve officials will view the labor market as giving them a chance to delay further easing of monetary policy, especially considering the robust wage growth. He suggests that even though inflation is expected to decline significantly in the coming months as labor market conditions start to slow down, the Fed will likely adopt a patient approach, still waiting to see what happens next.
Boussour initially forecast three rate reductions taking place in 2025 (in March, June, and September), but now she predicts that only two cuts will occur, scheduled for June and December.
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