US Jobs Report Alters South Africa’s 2026 Currency and Rates Outlook

Total nonfarm payrolls in America rose by 130 000 in January, according to the United States (US) Bureau of Labor Statistics. That was well above market expectations of roughly 50 000 and a sharp break from the subdued pace of 2025, when payroll growth averaged just 15 000 per month.

The unemployment rate slid marginally to 4.3%, at which level it is slightly higher than the 4.0% of a year ago, but by historical standards it remains low. The labour force participation rate held at a sound 62.5%.

Healthcare led the jobs charge, adding 82 000 jobs, far above its 2025 monthly average of 33 000. Social assistance added 42 000. Construction rose by 33 000, driven by nonresidential specialty trades. In contrast, federal government payrolls fell by 34 000 and financial activities shed 22 000 positions.

Among major worker groups, unemployment for teenagers declined to 13.6%, a notable improvement in a cohort that is typically the most sensitive to economic slowdowns. Adult unemployment rates remained low and broadly steady, with adult men at 3.8% and adult women at 4.0%. By race, unemployment stood at 3.7% for white workers, 7.2% for black workers, 4.1% for Asian workers, and 4.7% for Hispanic workers, with little month-to-month change.

Frans Cronje told The Common Sense that “beyond the strong jobs numbers, average hourly earnings rose 0.4% month-on-month and 3.7% over the year, while the average work week ticked up to 34.3 hours, all of which are strong directional indicators that the US economy has entered 2026 with more underlying resilience than many economists had assumed”.

“As a consequence, the data corroborates a sense that the US will be the primary engine of the global economy heading into 2026, with our sense being that Europe remains flat and China is under pressure amidst a real estate downturn, debt pressures, and deflationary risks. India, of course, is a parallel engine of global growth and somewhere where South African exporters should be focusing attention.”

He also said that the latest US jobs numbers complicate the 2026 interest rate outlook for both America and South Africa.

“A labour market that surprises on the upside makes it harder for the Fed to justify aggressive rate cuts. If growth holds and wages remain firm, the Fed may stay cautious. That implies higher-for-longer US yields relative to expectations just weeks ago, something further corroborated by the Kevin Warsh nomination, which will in turn limit the space for South Africa’s Reserve Bank to cut rates.”

In terms of the rand outlook, he said, “A more resilient US economy typically strengthens the dollar. If bond yields remain elevated and capital flows toward US assets, the dollar could appreciate. Our in-house view is that the downswing in the dollar begins to hit a bottom and reverses somewhat through the latter stages of 2026, which would tighten financial conditions globally, particularly for emerging markets with dollar-denominated debt.”

“An argument could be made that at current exchange rate levels, South African investors are entering prime dollar-buying territory,” said Cronje.

Away from the direct currency and rates implications, he said, “The latest US numbers show the futility of trying to stage a domestic South African economic recovery without striking a trade and investment pact with the US.”

The Common Sense has previously reported on just how easy it would be to secure such a pact.