Hiring rose sharply in January as employers rapidly added 353,000 jobs, highlighting a labor market that defies higher interest rates and household financial strains.
The Labor Department said Friday that the unemployment rate remained stable at 3.7%.
Economists surveyed by Bloomberg had estimated that 185,000 jobs were added last month.
The surprisingly strong performance was driven by big payroll growth in health care and professional services, but also boosted by some quirks related to holiday hiring, which may not continue in the coming months.
Still, the performance was not a one-month blip. Job gains for November and December were revised up by 126,000, having been upgraded from 216,000 to 333,000 in December. These changes reflect a stronger labor market in the fall than previously thought.
“The revisions to last month’s data added to today’s report make it clear that the economy is breaking new ground,” says Jane Oates, president of WorkingNation, a nonprofit that raises awareness of the challenges facing American workers. Raises and is the former head of employment of the Labor Department. And Training Division.
Are wages heading towards inflation?
Average hourly wages also rose sharply, climbing 19 cents to $34.55 and annual growth increasing from 4.3% to 4.5%. Since the spring of last year, wage growth has outpaced still-high inflation, giving consumers more purchasing power.
Is the Fed expected to cut rates?
Blockbuster job and wage growth could put the Federal Reserve on alert about cutting interest rates soon. The Fed plans to temporarily lower rates three times this year, but said this week that a cut in March is unlikely as officials want to ensure pandemic-related inflation growth is controlled over the long term. Go.
Jason Schenker, president of Prestige Economics, said, “Dreams of an imminent Fed rate cut coupled with tepid payrolls, massive job increases and a low unemployment rate are likely to be crushed by today’s report.”
He doesn’t expect the Fed to start lowering rates until the third quarter.
But other economists are still betting the central bank will take action in May. Fed Chairman Jerome Powell said this week that a strong economy and job market can co-exist with low inflation and that officials would not be discouraged from cutting rates as long as price rises remain slow.
Since wage gains contribute to inflation, the increase in wage growth in January raises concerns. But Nationwide economist Kathy Bostjancic says the Fed’s main focus will be whether inflation reports continue to slow over the next few months.
Which sectors are adding the most jobs?
Last month, professional and business services led the way with 74,000 jobs. health care added 70,000; retail, 45,000; social assistance, 30,000; and manufacturing, 23,000.
Federal, state and local governments added 36,000 jobs.
In recent months, industries that are less sensitive to rate increases and the ups and downs of the economy – such as government, health care and social assistance – have accounted for much of the recent U.S. job growth. This pattern continued to some extent last month, but job growth was broad-based as professional services and manufacturers hired lots of workers.
How many hours a week do most Americans work?
One glaring weakness in the report: The average work week fell to 34.1 hours from 34.3 hours, the lowest since the depth of the pandemic in March 2020. It is unusual for employers to give workers fewer hours, at the same time they are adding a lot of work to the workforce.
At least a partial answer is that companies are still struggling with the severe COVID-induced labor shortages of the past two years and are reluctant to let workers go, even if their sales are declining, Bostjancic says. . They may also be adding some workers as they eye an increase in demand in the times to come.
Since businesses have an abundance of employees, they are giving each one fewer hours, on average. This could indicate slow hiring in the coming months.
Yet EY-Parthenon economist Lydia Boussore says unusually cold weather last month may have played a role in the shorter hours.
How does weather affect employment?
There was a possibility of disturbance in the January totals due to some unusual undercurrents. Goldman Sachs wrote in a research note that cold, snowy weather in the Northeast and Midwest has reduced employment in industries such as construction and restaurants. It seemed to be at least partially working, with construction adding a modest 11,000 jobs and restaurants and bars cutting a few thousand.
Goldman said further declines were likely as unseasonably warm weather boosted employment in December, setting the stage for a decline as temperatures neared normal last month.
At the same time, retailers, hotels and trucking companies brought in fewer furloughed workers than usual late last year, leading to fewer layoffs in January and employment increases on a seasonally adjusted basis. Goldman estimated this would likely increase payrolls by about 100,000, more than offsetting the weather-related hit.
What is the hiring forecast for 2024?
The bigger picture is that consumer spending and job growth are likely to slow significantly this year as low- and middle-income households grapple with high interest rates, record credit card debt, still-elevated inflation and dwindling COVID savings. Have to face.
Moody’s Analytics expects the US to add an average of 72,000 jobs per month, down from 255,000 last year, and 399,000 in 2022, as stalled spending after the pandemic eases.
Will there be layoffs in 2024?
Big tech companies like Amazon, Microsoft and Google have recently announced thousands of layoffs and some economists continue to predict a mild recession in 2024.
But most forecasters believe the country will avoid recession. The same tech giants that are cutting staff in gaming and streaming are beefing up the workforce for artificial intelligence and machine learning, says Ger Doyle, senior vice president of Experis, the tech hiring arm of staffing firm ManpowerGroup.
Source: www.usatoday.com
