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Reviewing the latest labour market data from the US, “the muted 49,000 increase in non-farm payrolls in January illustrates that the recent wave of COVID-19 cases is still weighing on the economy,” said Capital Economics analysts. 

Key quotes

“But with infections now dropping back sharply and the recent fiscal boost set to feed through, we expect employment growth to rebound over the coming months.”

“The annual benchmark revisions were slightly more positive. The BLS had warned that the level of employment in March last year was going to be revised down by close to 250,000, but employment growth over the rest of 2020 was revised up by a cumulative 208,000.”

“As the vaccine rollout allows the economy to reopen and demand is given an additional lift from continued fiscal support, we expect the unemployment rate to reach 4.5% by the end of this year.”