The Fed has to monitor developments in the labor market responsibly, which brings attention to its January jobs report, due tomorrow. The market currently expects a 150K increase in nonfarm payrolls (less than last month's 199K increase), while the unemployment rate is 3.9% and average hourly earnings are projected to increase by 0.5% on a monthly basis. This pace of job growth will be watched closely amid market concerns about the outlook for rising interest rates. Another important fact will of course be the fee details.

The latest ISM and PMI indicators pointed to firms that expanded their workforce numbers in January despite tough labor market conditions. COVID-19 disruptions continue, with the current Omicron variant creating new uncertainties, and losses in ADP, especially in the service sector, are largely attributed to this. The increase in personnel costs in the labor force outlook in January is also an important fact that the problems in the labor force are currently pushing the wage balance upwards. That would mean more inflation. General labor conditions still indicate a tight enough picture. However, in fact, not only in January, when expectations were lowered, but also in the limited increase in December, it is revealed that the ongoing labor shortage still hinders employment growth.

Global markets are shaken by growing concerns about inflation and the increasingly hawkish stance of the US Federal Reserve. Therefore, the US jobs report for January will be on the lookout for more clues to the recent strength of the labor market implied in the latest FOMC statement. The inflationary phenomenon in wages will be closely monitored and it is more important than the headline figure. If the wage increase is in line with the expectations on an annual basis, it will mean that it will fall at a rate of 5.2%. Since wage inflation was at the level of 4.7% in December, both the increasing household expenditure demand and the reflection of the increased labor costs on the prices of goods sold will increase the inflation rate. effect will be observed. The main driving factor for the Fed is the danger of it turning into a spiral, and concerns like these are giving rise to aggressive tightening expectations.

Kaynak: Tera Yatırım
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