The US jobs market will take centre stage with January labour market data out on Friday. The labour market data are critical in the monetary policy deliberations for the US Federal Reserve and as a result, markets focus on all parts of the report, including the change in jobs, wages and the unemployment rate.
Since the peak intensity of the banking crisis, when the unemployment rate peaked at 10 per cent, a solid rate of job creation has seen the unemployment rate track lower and is now below 5 per cent. This is close to the low point seen in the cycles in early 2000s and again in 2007 which was just before a recession.
If the unemployment rate remains low, let alone falls further, the market will start to price in further interest rate hikes from the Fed and as noted above, this may deflate some of the euphoria in US stock prices.
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Source: Forbes
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