Jobs Report Indicates Fed won’t Cut Rates

“The broad-based strength in the January jobs report vindicates our view that the Fed won’t cut under [current Fed Chair Jerome Powell],” Shruti Mishra and her team at Bank of America advised in a note seen by Jim Eswards of Fortune.

 Analysts at Pantheon Macroeconomics noted that most of the jobs created were in health care, and the “implausible” new number seems way out of trend.

Analysts at Macquarie went so far as to argue that the Fed may be forced to raise rates if the job market continues to tighten.

“We continue to expect that the rate cutting is complete, with the next move likely to be a hike, potentially in 2026,” David Doyle and Chinara Azizova told clients.

But others think the headline jobs number conceals weakness below the surface. Mark Zandi, chief economist at Moody's, told followers on X that “indeed, over the past year, without the job gains in health care, the economy would have lost a bunch of jobs.”

Samuel Tombs and Oliver Allen at Pantheon Macroeconomics went further.

They noted that most of the jobs created were in health care, and the “implausible” new number seems way out of trend.

They added: “Our chart shows the openings-to-employment ratio in the health care sector has fallen recently and now is below its long-run average, suggesting a much weaker pace of growth in payrolls lies ahead.”