D'you think he knew?

Of course he did! Central bankers never want to be embarrassed by data releases just after they announce policy decisions, so there is no doubt that Fed Chair Jay Powell and his FOMC colleagues were granted a sneak peek at the December non-farm payrolls data ahead of their meeting earlier in the week. The extraordinary content of this morning's data release from the BLS clearly shows why Powell took such a cautious stance on the future direction of Fed policy. 

The US economy added a stunning, remarkable, (your adjective here) 517,000 jobs in January, way more than twice the consensus expectation. What's more, the previously-reported data for November and December were revised upward by a total of 71,000 jobs. The unemployment rate remains at a historically low 3.4 percent. 

The details of the release have already been exhaustively parsed in the media. Here, for example, is a lengthy and breathless exegesis by CNN, excited beyond belief by having to cover both this news and the bizarre Chinese balloon story on the same day. Just a couple of points to stress, in case they haven't already been covered elsewhere. 

• Employers have been wringing their hands over the near-impossibility of finding the workers they need for many months now, and yet today we find that the economy has somehow managed to add around a million new positions in just the least three months. Where are all these people coming from?  There are some clues in today's report. The BLS notes that the participation rate remains stubbornly below its pre-pandemic level. Moreover, it appears there are still over 4 million workers in part-time jobs who would rather be working full time. These little snippets of data suggest that the overall job market is not quite as tight as the headline figures make it look.
• Wages gains remain well-controlled. The year-on-year rise in average hourly earnings stood at 4.4 percent, below the year-on-year rise in consumer prices. Moreover, the month-on-month gain in wages in January was just 0.3 percent, which may imply that wage gains are actually moderating slightly. 

Today's numbers leave little room for doubt that the Fed will be raising rates again at the next FOMC meeting on March 21-22 -- unless, of course, there is a nasty negative surprise in the February payrolls data, which will be out on March 3. That said, the continuing absence of any real upward pressure on labor costs still suggests that the tightening cycle does not have much further to go.