January's jobs report was a mixed bag of data that will probably lead the Federal Reserve to continue holding off on any more rate cuts in the near term, asset managers said.
The report showed a weak headline January payroll, but significant upward revisions to the prior two months’ figures, said Lindsay Rosner, head of multisector fixed income investing at Goldman Sachs Asset Management, which has $3.1 trillion in assets under supervision.
“This month’s release was impacted by one-off factors including wildfires in California and a cold snap in other parts of the country,” she said. “We think the Fed is likely to be cautious about reading too much into today’s report.”
Glen Smith, chief investment officer at GDS Wealth Management, with $1.2 billion in assets, also noted the confusing nature of the January jobs report, but he remains confident that it will not derail the Federal Reserve's patient stance when it comes to rate cuts.
“We would need to see multiple weaker jobs reports in a row in order for the Fed to cut interest rates sooner,” Smith added. “Investors will be looking ahead to next Wednesday's CPI inflation report, which will be another key economic data point in the Federal Reserve's calculus on interest rates."
The U.S. economy created 143,000 jobs in January, well below December’s upwardly revised figure of 307,000 and below economists’ expectations, the U.S. Bureau of Labor Statistics reported on Feb. 7.
The unemployment rate edged down to 4% from the 4.1% figure from the prior month.
Economists had expected an increase of 170,000 jobs in January and a jobless rate of 4.1%, according to a survey by FactSet Research Systems, a financial data firm.
The Bureau also noted some revisions to payroll figures from the past two months: The November figure was revised up by 49,000 to 261,000, while the December data was revised up by 51,000 to 307,000. With these revisions, employment in November and December combined was 100,000 higher than previously reported.
