Investing.com – US data published on Friday surprised on the upside, once again illustrating the resilience of the US labor market. According to the monthly report from the Bureau of Labor Statistics (BLS), Nonfarm Payrolls (NFP) increased by 256,000 in December, far exceeding the 160,000 job creations anticipated by analysts. At the same time, the unemployment rate fell from 4.2% to 4.1%, its lowest level since July, while labor force participation remained stable at 62.5%. Additionally, the average increase in hourly wages slowed to 3.9% year-over-year, compared to 4% the previous month.
This strong report immediately benefited the US Dollar, which appreciated by 0.7% to reach 109.90, its highest level since November 2022. Major currencies such as and came under significant downward pressure, pushing the Euro Dollar at a low below 1.0300 and the Pound at its weakest levels since November 2023. As for currencies linked to raw materials, such as , the rise in the greenback has caused a further decline below significant technical thresholds, reflecting increased distrust towards risky assets.
On the other hand, the equity markets generally received these figures with caution. Investors fear that an overly robust labor market will delay possible rate cuts by the Fed, already worried about the persistence of inflation. The were down 0.6% pre-open, and the S&P 500 was down 0.7%. If the strong growth in employment demonstrates good health of the economy, it also increases the risk that the Fed remains with a less accommodating monetary policy, which could weigh on stock market valuations.
Finally, the NFP report turns out to be mixed in terms of employment composition. Some sectors, such as manufacturing, showed signs of weakness (-13,000 positions), while others, particularly services and the government sector, supported employment growth. Revisions for previous months result in an overall adjustment of -8,000 positions, signaling a slight slowdown, but the general trend remains toward job creation. In this context, traders remain attentive to the next Fed meeting, to assess whether these good employment figures will prolong the current tightening policy, or whether a possible future economic slowdown could ultimately reverse the central bank’s trajectory. .
