MNI US Employment Insight: Strong Trends Kick Next Cut To Sept

• The January payrolls report saw a modest miss for nonfarm payrolls but it was more than offset by a robust two-month net revision along with a smaller than expected benchmark revision.
• Further, the unemployment rate again surprised lower at 4.0% for its lowest since May 2024 in a further step away from the 4.3% the median FOMC member forecast for 4Q25 in the December SEP.
• Wage growth meanwhile also surprisingly accelerated but against a notable caveat of average weekly hours sliding to lows last seen in the depths of the pandemic and mid-2010 (that’s despite the BLS saying adverse weather played no impact).
• The combination saw Fed rate cut expectations trimmed again to 37bp of cuts for 2025 vs 43bp pre-data, although it was clearly less overtly hawkish than the December payrolls report which briefly saw 25bp of cuts priced for the year in subsequent Asia trade.
• We have seen one explicit analyst view change on the back of the data: Standard Chartered now call for a terminal of 4%, reached in Q3, vs 3.5% previously.  

PLEASE FIND THE FULL REPORT HERE: USEmploymentReportFeb2025.pdf