Does the "Strong Jobs" report increase the outlook for rate hikes? By Investing.com

Investing.com – A Strong Increase in Nonfarm Payrolls for January, Combined with Very Tepate Wage Growth, Could Put the Federal Reserve in Choices Against the Need for Tighter Monetary Policy .

increased by 304,000 in January, exceeding consensus expectations for the creation of only 165,000 jobs. However, a measure of wage inflation rose only 0.1% in the month, below expectations of 0.3%.

Allianz (DE :), chief economist Mohamed El-Erian, said the report showed "another huge beating for the number of titles. Once again, the economy has created almost twice as many jobs as consensus expectations for the month.

A surprise increase of 4.0% could be considered a temporary effect of the recent US government shutdown.

"The impact of the partial closure of the federal government has contributed to the rise of these measures," explained the Bureau of Labor Statistics in its report.

But there was also a big downward revision compared to the previous month. The increase of 312,000 from the payroll of December was revised to 222,000. The month of November went from 176,000 to 196,000.

The Fed decided to keep interest rates steady this week and pointed out that opposing economic currents suggested that "waiting patiently for more clarity" was the best position.

Markets remained skeptical about the Fed's pursuit of two further rate hikes this year, as forecast by policymakers in December.

Even after the publication of the high number of jobs, the likelihood of a rate cut until October has increased, according to Investing.com.

El-Erian said the jobs reports should "address concerns about a significant slowdown in growth and end discussions on a recession" this year.

It will also "fuel the debate that the Fed has gone too far in nice markets," he said.

In his commentary on the January employment report, James Knightley, chief economist at ING, said that "the Fed is on a hiatus, but arguments in favor of a rate hike will persist" .

"As workers' wages are on the rise and employees feel secure in their jobs, consumer spending will likely remain firm while heightening inflationary pressures in the economy. Fed Chairman Jerome Powell spoke of cross-cutting economic and market trends, justifying a pause by the Federal Reserve, but if we could get better news from the US-China trade relations, it would lessen part of the global gloom, "said Knightley.