Economy

Nonfarm payrolls surged by 256,000 for the month, up from 212,000 in November and above the 155,000 forecast.
The unemployment rate edged down to 4.1%, one-tenth of a point below expectations. A broader jobless measure moved down to 7.5%, a decrease of 0.2 percentage point and the lowest since June 2024.
Average hourly earnings increased 0.3% on the month, which was in line with forecasts, but the 12-month gain of 3.9% was slightly below the outlook.
Stock market futures plunged after the report while Treasury yields soared as traders price in a lower probability of Fed rate cuts this year.

Job growth was much stronger than expected in December, likely providing the Federal Reserve less incentive to cut interest rates this year.
Nonfarm payrolls surged by 256,000 for the month, up from 212,000 in November and above the 155,000 forecast from the Dow Jones consensus, the Bureau of Labor Statistics reported Friday.

The unemployment rate edged down to 4.1%, one-tenth of a point below expectations. An alternative measure that includes discouraged workers and those holding part-time positions for economic reasons moved down to 7.5%, a decrease of 0.2 percentage point and the lowest since June 2024.
Stocks plunged plunged after the report while Treasury yields soared as traders price in a lower probability of Fed rate cuts this year.
“This is a hot report,” said Dan North, senior economist for North America at Allianz Trade. “You have to think that [Fed Chair] Jerome Powell is breathing a sigh of relief in the sense that his job just got a little bit easier. Inflation hasn’t been moving anywhere for months, so there’s no incentive to cut rates. Now you get this [jobs report] so you don’t need to cut rates to stimulate the economy.”
The report brings to a close a year in which employment grew each month, though inconsistently and at times raising questions over whether a recession loomed. However, the final two months showed a labor market still operating at strength as the Fed contemplates its next moves on monetary policy.

One area that Fed officials have stressed to not be a source of inflation is the labor market, and wages grew slightly less than expected.

Average hourly earnings increased 0.3% on the month, which was in line with forecasts, but the 12-month gain of 3.9% was slightly below the outlook and indicative that wage inflation at least is becoming less of a factor. The average workweek again held steady at 34.3 hours.
“You’re never going to hear me complain that we got 250,000 jobs,” Chicago Fed President Austan Goolsbee said on CNBC’s “Squawk on the Street.” “I think it’s a strong jobs report. It makes me further comfortable that the job market is stabilizing at something like the full employment rate.”

Job growth came from the familiar sources of health care (up 46,000), leisure and hospitality (43,000), and government (33,000).
Retail also saw a sizeable gain, up 43,000 after losing 29,000 in November heading into the holiday shopping season. The sector saw payroll growth of 2.2 million for the full year, down sharply from the 3 million gain in 2023.
Revisions for prior months were less substantial than has been the recent trend. The October count saw an upward change of 7,000 to 43,000, while the November number was cut by 15,000 from the prior estimate.
At their December meeting, Fed officials deemed the labor market mostly healthy though slowing. The Fed voted at the meeting to lower its key borrowing rate by a quarter percentage point while indicating a slower pace of reductions ahead.
Markets expect the Fed to hold pat at the meeting later this month, with futures pricing after the jobs report swinging to the expectation of just one cut this year. The market-implied probability of a single cut increased to 68.5% after the jobs report, according to the CME Group’s FedWatch gauge.

Goolsbee said he still expects rate cuts this year as long as the data flow stays consistent.
“The surprisingly strong jobs report certainly isn’t going to make the Fed less hawkish,” said Ellen Zentner, chief economic strategist at Morgan Stanley Wealth Management. “All eyes will now turn to next week’s inflation data, but even a downside surprise in those numbers probably won’t be enough to get the Fed to cut rates any time soon.”
Central bankers have expressed concern lately with the pace of inflation, which has held above the Fed’s 2% target largely because of stubbornly high housing costs as well as some goods prices.
The household report, which the BLS uses to calculate the unemployment rate, presented an even stronger jobs picture. That count increased by 478,000 on the month , as the labor force grew by 243,000 and the share of working age people either holding jobs or looking for employment held steady at 62.5%.
Full-time employment increased by 87,000, while part-time workers surged by 247,000. The level of unemployed workers fell by 235,000.
The duration of unemployment edged higher to 23.7 weeks, the highest level since April 2022. However, those reporting out of work for 27 weeks or more declined to 1.55 million, down 103,000.

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In Latin America’s largest-economy, 12-month inflation closed last year at 4.83%, statistics agency IBGE said on Friday, below both the 4.88% expected by economists polled by Reuters and the previous month figure of 4.87%.Despite the modest easing in the headline data, economists believe the figure will not prevent the local central bank from pressing ahead with interest rate hikes.The bank had previously said inflation was all but certain to end 2024 above its 1.5% to 4.5% target range, a level it expects to remain in place until the third quarter before a decline starts.Policymakers at the bank have faced a challenging scenario marked by robust activity, a tight labor market and unanchored inflation expectations despite projections of a more aggressive rate path through this year.They unanimously voted to accelerate their tightening pace with a 100 basis-point hike last month, bringing interest rates to 12.25%, and signaled matching moves for the next two meetings as they seek to reach the official 3% inflation target.”There is little in this IPCA release that will prevent (interest rate-setting committee) Copom following through with its guidance at its meeting in December,” Capital Economics’ deputy chief emerging markets economist Jason Tuvey said.In December alone, IBGE data showed, consumer prices as measured by the benchmark IPCA index rose 0.52%, slightly below the 0.57% increase expected in the Reuters poll but accelerating from the previous month’s 0.39% rise.The monthly figure was driven by higher food and beverage costs, which rose 1.18% in the period. Transportation and clothing prices were also up, the statistics agency said, while housing costs dropped.”This is a relatively positive end to the year, but it offers little comfort as the inflation outlook has deteriorated significantly,” Pantheon Macroeconomics’ chief Latin America economist Andres Abadia said.”Leading indicators and unfavorable inertia suggest inflation will remain uncomfortably high in the coming months, compelling the Copom to continue tightening rates.” More

(Reuters) -U.S. stock index futures slipped on Friday ahead of a crucial labor market report, at a time when concerns around inflation and the incoming Trump administration’s policies have clouded the Federal Reserve’s monetary policy outlook.At 7:06 a.m. ET, Dow E-minis were down 66 points, or 0.15%, S&P 500 E-minis were lower 18.25 points, or 0.31% and Nasdaq 100 E-minis were off 78.75 points, or 0.37%.Elevated Treasury yields also added to investor nervousness, with those on the 10-year benchmark near an eight-month high at 4.69%. All eyes are on the Labor Department’s non-farm payrolls report, due at 8:30 a.m. ET, after a set of jobs data earlier in the week painted conflicting views about the state of employment.Friday’s data is expected to show the economy added 160,000 jobs in December, with unemployment staying steady at 4.2% from the month before.Later in the day, investors will also assess the University of Michigan’s preliminary report on consumer sentiment for January.Wall Street’s main indexes are poised to close their second consecutive week in the red, with the benchmark S&P 500 down nearly 3% from its record high hit a month ago.Fresh inflation worries have taken the spotlight, compelling the Fed to issue a cautious forecast on monetary easing last month, as it anticipates policy changes on trade and immigration under President-elect Donald Trump, who is expected to take office in 10 days time.Multiple reports on his plans, including one on imposing a national economic emergency to fast track tariff implementation, have left investors on edge about their potential impact on the economy and global trade.The Russell 2000 index, tracking domestically focused small-cap companies, has lost over 8% from its record high hit in late November. Futures tracking the index dipped 0.2% on Friday.Voting members on the Federal Open Market Committee have voiced the need for a measured approach to lowering borrowing costs this year, the latest being St. Louis Fed President Alberto Musalem according to a report.Traders see the central bank leaving interest rates steady for much of the first half of 2025, according to the CME Group’s (NASDAQ:CME) FedWatch Tool.”With considerable uncertainty about the impact of potential tax and trade policy, inflation stuck firmly above target and the labor market remaining resilient, the argument for further rate cuts is getting harder to make,” said Max McKechnie, global market strategist at J.P. Morgan Asset Management.Among premarket movers, chip stocks such as Nvidia (NASDAQ:NVDA) dropped 1.4% after a report said the U.S. could announce new export regulations as early as Friday.Delta Air Lines (NYSE:DAL) rose 5.3% after forecasting a higher-than-expected annual adjusted profit and U.S.-listed shares of TSMC added 1% as the chipmaker beat fourth-quarter revenue estimates.Insurance companies such as Mercury General (NYSE:MCY) slumped 40.7%, AIG (NYSE:AIG) dropped 3.1% and Travelers (NYSE:TRV) fell 4% on expectations of high industry losses from wildfires in Los Angeles. Nike (NYSE:NKE) gained 1.1% after Piper Sandler upgraded the stock to “overweight” from “neutral”.Earnings reports will pick up next week and investors wait to hear the possible impact the incoming government’s policy proposals could have on companies, along with insights into the resilience of the consumer and the U.S. economy. More

ABUJA (Reuters) -Nigeria and the United States have signed an agreement to repatriate about $52.88 million in assets forfeited by a former Nigerian oil minister and associates, Nigerian Justice Minister Lateef Fagbemi said on Friday.The agreement “concretizes the repatriation of approximately $52.88 million arising from the forfeiture of the Galactica assets, linked to the former Petroleum Resources Minister Diezani Alison-Madueke and her associates,” Fagbemi said in a statement.The funds will be used to support rural electrification projects through the World Bank, with $50 million allocated to increasing access to renewable energy, Fagbemi said. The remaining $2.88 million will be disbursed as a grant by Nigeria to the International Institute for Justice to support counter-terrorism capacity across Africa, he said. More

The Wall Street brokerage forecast the MSCI All Country World Index Local, a benchmark performance gauge of world stocks, to hit 1,140 points by the end of this year, implying a 10% upside to its last close of 1,035.46.Citi estimated a 10% earnings-per-share(EPS) growth for global equities, slightly below analyst consensus of 13%, adding that U.S. and emerging market regions could see the strongest EPS growth of about 15%.Maintaining its “overweight” stance on U.S. equities, Citi said President-elect Donald Trump’s policies are “a key source of uncertainty, as tariffs, tax cuts and deregulation will bring a complicated mix of favorable and adverse economic effects.”The U.S. benchmark S&P 500 index rallied 24% in 2024, fueled by growth expectations surrounding artificial intelligence, expected rate cuts from the U.S. Federal Reserve, and more recently the likelihood of deregulation policies from the incoming Trump administration.”While AI is no longer expected to provide as much EPS growth advantage vs. the rest of the index, any continuation of USD strength and policy uncertainty on tariffs could extend its outperformance,” Citi analysts added.Among other regional equity markets, Citi maintained its “neutral” view on emerging markets, “underweight” on Australia and Japan, and “overweight” on Continental Europe.On the global sector front, the brokerage raised its rating on health care to “overweight,” consumer staples and materials to “neutral,” and downgraded consumer discretionary, utilities and industrials to “underweight.” More

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