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The United States added a larger-than-expected number of jobs last month, providing further evidence that the economy still has plenty of strength.
Employers added 353,000 jobs in January and the unemployment rate stood at 3.7 percent, the Labor Department reported Friday.
The labor market’s resilience more than three years after the country lost 14 percent of its jobs at the start of the COVID-19 pandemic has surprised economists, who had expected factors including the Federal Reserve’s interest rate hike to accelerate the Hiring will slow down. Strong data on Friday is likely to strengthen the Fed’s patience as it begins a rate cut.
“Layoffs are happening, but workers are able to find new positions,” said Sarah Routledge, an independent economics consultant. “It’s almost like a ‘pinch me’ scenario.”
Ms. Rutledge helped tabulate the latest member survey of the National Association for Business Economics, which found rising optimism that the country will avoid recession — consistent with changes in measures of consumer confidence as inflation has eased.
The increase in January was even more impressive than the previous two months, bringing monthly average job gains to 255,000 in 2023. Professional and business services rose sharply by 74,000 jobs, while health care added 70,000 jobs. The only major sector to lose jobs was mining and logging.
The bumper harvest of additional jobs, nearly double what forecasters expected, reflects similar surprise strength in the gross domestic product measure for the fourth quarter of 2023.
Average hourly earnings also rose faster, up 0.6 percent from December, though that may be related to a shorter work week and the addition of many white-collar workers, who tend to earn more money. Hotels and restaurants, where wages are lower, eliminate a few thousand jobs.
Agron Nikaj, a U.S. economist at banking and financial services firm MUFG, said job postings in professional and business services have increased over the past few months. This could mean that the January bounce will be short-lived.
“I wouldn’t expect another rally because of the increased industry relations and openness this month,” Mr Nikaj said. “I think this month reflects the replenishment of jobs they couldn’t fill.”
The start of the new year has been an exceptionally good economy for many workers, with the number of open jobs still exceeding the stock of people looking for positions, even as new immigrants and women enter the workforce in unprecedented numbers. Has joined or re-joined. Wages are rising faster than their historical rates, and strong growth in productivity has helped keep those fat paychecks from fueling price increases.
Over the past year, most of the gains have been driven by sectors that either took longer to recover from the pandemic – including hotels, restaurants and local governments – or due to structural factors such as aging demographics and pent-up demand for housing. The speed has decreased.
Other categories that experienced supersized growth during 2021 and 2022 are returning to their pre-pandemic trends, including transportation, warehousing, and information technology. Some other sectors, such as retail, have been largely flat.
Despite major announcements of layoffs at companies like UPS, Google and Microsoft, employers across the economy are reluctant to lay off workers, worried about a shortage of workers if business picks up again.
In the coming months, economists expect the labor market to become more like it was before the pandemic, without a huge increase in employment following the pandemic-induced lockdowns. The latest numbers may call that assessment into question.
Even the manufacturing sector, which has been in a mild recession for almost a year, added 23,000 positions. This reflects optimism in the latest purchasing managers’ index for manufacturing, which unexpectedly jumped last month. Timothy Fiore, chairman of the Institute for Supply Management committee that oversees the survey, said it feels like this is the beginning of a change, albeit a slow one.
“Now we’re starting to gain altitude,” Mr. Fiore said. “This is not the fighter pilot’s advantage; That’s the advantage of a cargo plane.”
Source: www.nytimes.com
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