DAVY VIEW

Nonfarm payrolls surprised to the upside for January. However, in the context of a weak result in 2025 with little net jobs growth across the year, it remains unclear whether the US labour market has strengthened or remains weak, especially as jobs gains were in sectors with lower wages. Our analysis of hiring and separations data suggests that the key measure of labour demand could be overstated, suggesting a weaker underlying picture. While the next rate cut is not priced in until June, we would not be surprised if a downward move occurs sooner.