News from the US overnight is that US employers hired far more people than expected last month.And it's raised the risk that the US Federal Reserve may lift interest rates even higher than it was planning this year, to try to dampen demand and inflation.
"Labor market resilience was underscored by other data on Thursday showing private employers hired far more workers than expected last month. The reports suggested the economy ended 2022 on solid footing, despite a raft of layoffs in the technology industry as well as in interest rate-sensitive sectors like finance and housing.
"The sustained jobs market strength raises the risk that the Fed, engaged in its fastest interest rate-hiking cycle since the 1980s as it tries to dampen demand to tame inflation, could boost its target interest rate above the 5.1% peak the U.S. central bank projected last month and keep it there for a while.
"Fed officials are expecting a slowing in the job market given the big increase in interest rates last year," said Stuart Hoffman, senior economic advisor at PNC Financial in Pittsburgh, Pennsylvania. "Right now the labor market is too tight for the Fed, and job growth is too strong." "Initial claims for state unemployment benefits decreased 19,000 to a seasonally adjusted 204,000 for the week ended Dec. 31, the lowest level since the end of September, the Labor Department said. Economists polled by Reuters had forecast 225,000 claims for the latest week. Through the volatility of the year-end holidays, claims have remained at very low levels.