Some folks on Wall Street think yesterday’s U.S. jobs number was ‘implausible’ and thus due for a downward correction

S&P 500 futures are up 0.32% this morning, with the index closing unchanged at 6,941 yesterday. Investors appeared to be encouraged by strong job market data released yesterday by the U.S. Bureau of Labor Statistics. With the unemployment rate falling to 4.3% from 4.4%, many Wall Street analysts say that means the Fed is now less likely to cut interest rates further. The theory goes that if the economy is doing well, there is no need to risk inflation by providing more and cheaper money.

Some of them believe the labor market is now so tight that the Fed may even Increase interest rates (a situation that may incite the ire of President Donald Trump).

But as always, the devil is in the details. Some analysts worry the latest data may be wrong, with U.S. job creation at lower levels than the statistics suggest.

First, the number of new jobs added in January was 130,000, about double analysts’ expectations. Of course, analysts aren’t always right. But interestingly, the reported numbers are far from economists’ estimates.

Second, the Bureau of Labor Statistics lowered its previously reported employment numbers for 2024-2025. The agency said the actual number was only 181,000, not the 584,000 previously estimated.

This suggests that January’s numbers may also be revised downwards in the coming months.

For now, traders choose to believe the numbers. The highly reliable CME FedWatch Index, which tracks bets on the Fed’s future rate-setting decisions, shows a 92% chance of the Fed keeping rates at 3.5% in March and a 78% chance of keeping rates at that level in April. In June alone, the probability of a rate cut reached 50%.

“The broad-based strength in the January jobs report supports our view that the Fed will not cut spending [current Fed chairman] Powell,” Shruti Mishra and her team at Bank of America advised in a note. wealth. (Powell will leave office in May.)

Macquarie analysts even believe the Fed may be forced to raise interest rates if the job market continues to tighten. David Doyle and Chinara Azizova told clients: “We still expect that the rate cuts have been completed and that the next step may be a rate hike, possibly in 2026.”

But others believe the overall jobs data masks weakness beneath the surface. Moody’s Chief Economist Mark Zandi told Channel

“In fact, over the past year, without job growth in health care, the economy would have lost a lot of jobs,” he said, illustrating his point with this chart:

Samuel Graves and Oliver Allen of Pantheon Macroeconomics go further. They noted that most of the jobs created were in health care, and that this “incredible” new number appears to be off trend.

“In January 2025, the model extrapolates that new or closed healthcare businesses created a net of 40,000 jobs. In January of this year, the model assumes 85,000 jobs were created. Our chart [below] The ratio of job openings to employment in the health care industry has declined recently and is now below its long-term average, suggesting a sharp slowdown in job growth going forward. “

They believe January’s sharp rise reflects flaws in the statistical models used to collect the data.

“It is too early to conclude that the labor market has reached an inflection point,” they said. “As a result, we still expect the FOMC to ease policy by 75 basis points this year, but we now expect rate cuts in June, July and September, rather than March, June and September.”

Here’s a snapshot of the market ahead of the opening bell in New York this morning:

• S&P 500 Index Futures are up 0.32% this morning. It closed unchanged at 6,941 points on the previous trading day.

• Stoxx Europe 600 Index It was up 0.45% in early trading.

• UK FTSE 100 Index It was up 0.3% in early trading.

• Japan’s Nikkei 225 Index is flat.

• China CSI 300 up 0.12%.

• Korea Composite Stock Price Index up 3.13%.

• Indian NIFTY 50 down 0.57%.

• Bitcoin Rising to $67.5K.

This story originally appeared on Fortune.com