US January jobs reports - Economists react

"Although the 151,000 gain in non-farm payrolls in January was a little below the consensus forecast of a 190,000 gain, the rest of the employment report was very encouraging, with the unemployment rate dropping to an eight-year low of 4.9%. Adding to the good news, average weekly hours worked edged up to 34.6, from 34.5, and average hourly earnings increased by a bigger than expected 0.5% m/m [...] there does now appear to be a clear upward trend in earnings growth." - Paul Ashworth, Capital Economics

"While we have not changed our view that labor markets remain healthy and, in turn, recession risk for the US economy remains low, the weakness in services sector employment in the establishment report is likely to keep uncertainty about the state of the economy elevated. The divergent signals from the two labor market surveys, in our view, mean the FOMC will likely desire to see further evidence to know whether the signal from a strong household survey or a weaker establishment survey is correct." - Michael Gapen, Rob Martin, Jesse Hurwitz, Barclays

"What this all means for the Fed is unclear, but their obsession with wage inflation makes it very risky to assume they'll focus only on the payroll "slowdown", especially if you think their analysis of the latter will be a bit more sophisticated than just looking at the headlines. We still think the March FOMC is live, but the data between now and then will need to be decent. In the meantime, listen very closely to Yellen's testimony next Weds, 10am Eastern. If she majors on wages, don't ignore her just because the ISM manufacturing survey is weak. " - Ian Sheperdson, Pantheon Macroeconomics

“Signs of a slowdown in hiring, still-weak annual pay growth and disappointing survey data, all pitched alongside an adverse financial market environment so far this year, reduce the odds of the Fed hiking rates again in March. We note also that the data showed the labour market participation rate to have been running at a near four-decade low of 62.7%, flattering the unemployment rate and possibly overstating the current tightness of the labour market." - Chris Williamson, Markit

"The report unequivocally supports the Federal Reserve’s (and our) baseline view that further gradual rate hikes are warranted. After all, ongoing labor market dynamics are the main driver of consumer spending, which in turn is the main driver of economic growth in the US. A falling unemployment rate and faster wage gains also mean that the Fed is getting closer to meet both of its mandates. [...] So while this report is undoubtedly a step in the right direction, the FOMC wants to see more of these signs before pulling the trigger again." - Dr. Harm bandholz, UniCredit Research