Washington: US job growth accelerated sharply in January, with the unemployment rate reaching a 53-and-a-half-year low of 3.4%. This shows that the labor market is stubbornly tight, and that the Federal Reserve could become a headache in its fight against inflation.
A jobs report closely monitored by the Labor Department on Friday also showed job creation over the past year was much stronger than previously estimated, suggesting the economy is far from recession. The rate fell further in January, but average hourly earnings in 2022 increased faster than previous estimates.
Strong employment despite job cuts in technology sectors, as well as interest rate-sensitive sectors such as housing and finance, has pushed the central bank to halt the tightening cycle of monetary policy. Cold water was poured on the anticipation.
Economists said Friday’s mind-boggling report and other data showing a sharp rebound in service industry activity last month suggested the Fed would raise its target rate above its recently projected peak of 5.1%, keeping it off for some time. , said that it suggests that it is possible to maintain the
“The labor market is still overheated, too hot for the Fed’s liking,” said Daniel Vernazza, chief international economist at UniCredit Bank London. “Those who thought the Fed might stop raising rates so soon at its March meeting will be disappointed by this evidence.”
Nonfarm payrolls rose by 517,000 last month, the most in six months, according to a business office survey. December data has been revised higher to show 260,000 jobs added instead of the 223,000 previously reported. Job growth last month was well above the 2022 monthly average of 401,000.
In a January report, the Department of Labor’s Bureau of Labor Statistics (BLS) released a revised version of its annual salary “benchmark”, detailing the formulas it uses to smooth data for periodic seasonal fluctuations in establishment surveys. Has been updated.
The economy added 568,000 more jobs in the 12 months to March 2022 than previously reported. Revised payroll data for April through December also show more jobs were created than previous estimates. The economy will see him add 4.8 million jobs in 2022, instead of his previously reported 4.5 million.
The revision dispels claims by Philadelphia Fed researchers who published a paper in December suggesting job growth in the second quarter of 2022 was exaggerated by about 1 million jobs.
BLS has revised its industry classification system, resulting in the reclassification of about 10% of jobs into another industry. A strong increase in employment last month was led by the leisure and hospitality sector, which added 128,000 jobs, of which 99,000 were in restaurants and bars.
Leisure and hospitality employment remains 495,000 below pre-pandemic levels. Jobs in professional and business services rose by 82,000, with temporary help jobs boding for future employment, up 25,900 after several months of decline. Government employment numbers jumped to his 74,000, boosted by the return of striking university workers in California.
The construction industry added 25,000 jobs, most of them professional trade contractors. Manufacturing employment he increased by 19,000.
Wall Street stocks were mostly trading at low prices. Dollar rose against a basket of currencies. US Treasury prices fell.
Wage growth slows
Average hourly earnings rose 0.3% last month after rising 0.4% in December. That took his year-over-year gain in wages down to 4.4%, his smallest rise since August 2021 from his 4.8% in December. However, wage growth for 2022 has been revised upwards, suggesting that wage inflation remains at a slower pace than previously thought. Average weekly hours worked increased from 34.4 hours in December to 34.7 hours.
“Although we are rightly skeptical about the extent of wage growth and total hours worked given the perceived slowdown in growth, almost all labor market indicators included in this report show improvement. We’ve been pointing out that the situation in the labor market is showing,” said Conrad Dequadros, senior economic adviser at Breen Capital in New York.
President Joe Biden said the jobs report shows his economic plan is working. “Jobs are increasing, inflation is falling,” the Democratic president wrote on Twitter.
The Fed on Wednesday raised its policy rate by 25 basis points to a range of 4.50% to 4.75% and promised “continued increases” in borrowing costs. According to government data this week, there were 11 million job openings at the end of December, and he had 1.9 job openings for every unemployed person.
The BLS also incorporated new population estimates into the household survey, from which the unemployment rate was derived. So while the 3.4% unemployment rate, the lowest since May 1969, is no match for his 3.5% in December, it has not been affected by the new population limits.
Household employment surged by 894,000, but the increase was only 84,000 given the new population estimates. Some 886,000 people joined the workforce, but adjusting for population control reduced that number by 5,000.
The labor force participation rate, the percentage of working-age Americans who have or are looking for work, rose from 62.3% in December to 62.4% in January. There was no change after taking into account the new population projections.
Jobs data hinted at a recovery in manufacturing output last month.There are also signs that retail sales are off to a strong start to 2023. The economy continues to show resilience despite 450 basis points of rate hikes since March last year.
“It’s good to think that the Fed sees this as a success and that slowing rate hikes can bend the job market, but it can’t break it.” Black Rock in New York.
“Today is good evidence that the job market has not collapsed, and evidence of how the economy can adapt and remain thriving in the face of major headwinds.” – Reuters
