Observers are stunned: more than 353,000 jobs were created in the US in January. And there's more – the job report for the first month of a year also came with a sharp upward revision of the provisional December 2023 figure (333,000 new jobs instead of 216,000). "Speechless," said Michael Kramer, founder of investment firm Mott Capital Management. "A jobs number that crushes expectations, but more impressive was the near doubling of wage growth… Forget the rate cuts in March."

The US economy continues to move full steam ahead, as revealed by the growth figure for the last quarter of 2023, which was also well above expectations (3.3% at annual rate). Job growth was widespread during January, led by the business services sector with its 74,000 jobs. Other major contributors include healthcare (70,000), retail (45,000), government (36,000), social assistance (30,000) and manufacturing (23,000). The unemployment rate remains stable at 3.7%.

Further evidence of the euphoria is the rise in the average hourly wage in the non-agricultural private sector, increasing by 0.55% in January (+6.6% at annual rate), the first time this has happened since March 2022. This is all the more reason to fear an inflation-wage-hike spiral. Against this backdrop, the markets are no longer counting on a rate cut by the Federal Reserve (Fed) in March, and its president, Jerome Powell, said so almost officially on Wednesday January 31 at his press conference. "I would tell you that I don’t think it’s likely that the committee will reach a [sufficient] level of confidence by the time of the March meeting to identify March as the time to [cut rates. But that’s to be seen," Powell said. Monetary easing is now expected to take place in May.

Logically, interest rates tightened – 10-year yields jumped from 3.88% to over 4% on the release of the unemployment figures – while Wall Street, which was poised to open with a bang on the back of Meta and Amazon's stellar results announced the previous day, was up only slightly in the early morning. However, the stock market took off in the middle of the day (+0.9% for the S&P 500 and +1.4% for the Nasdaq, the index for technology stocks): "Too bad about high rates, it's better a flourishing economy," the market seemed to want to say before coming around. The dollar strengthened, with the euro down a cent to $1.08.

This excellent employment performance, however, has come with downsizing plans. According to Layoffs.fyi, 115 tech companies have cut more than 30,000 jobs since the start of the year. In 2023, the sector had shed 262,000 jobs across almost 1,200 companies.

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