The US labor market defied expectations in January, showing iron health despite fears of a slowdown and layoff announcements, with a rebound in job creation and an unemployment rate at all-time lows since 1969. In the first month of the year, 517,000 jobs were created, the Labor Department announced on Friday.
“Job growth was across the board, led by gains in recreation and hospitality, professional and business services, and health care,” the Labor Department said in its statement. This is almost double the 260,000 jobs that were created in December, according to upwardly revised data also released on Friday. Analysts, on the other hand, had expected a slowdown to 187,000, according to the Briefing.com consensus.
“The pace of job growth has tended to slow over the past six months, but January bucked that trend,” said MBA chief economist Mike Fratantoni. As for the unemployment rate, which had been returning to its pre-pandemic level for several months, the lowest in 50 years, it fell a little more, to 3.4% (-0.1 point).
“Great Resignation”
“The labor market is too strong for the good health of the economy!” However, warns Kathy Bostjancic, chief economist at insurance company Nationwide. In fact, this paradoxically increases the risk of recession. Because the US central bank, the Fed, should want to keep raising their rates, to slow down the economy and therefore make sure they nail too high inflation.
Job creation figures for the private sector alone, released Wednesday, however, had shown a sharp slowdown, according to the monthly ADP/Stanford Lab survey. But that was due to adverse weather conditions, including California’s devastating floods. And make no mistake: The job market “is still robust regardless of the weather consequences,” ADP chief economist Nela Richardson had said.
One sign, however, tends to show that the situation is changing: the increase in wages is now less strong, +4.4% compared to January 2023, compared to +4.8% in December in one year . Wage increases had risen to 5.9% year-on-year in March. In fact, for almost two years, the ball has been in the court of the employees, since the country lacks manpower. Businesses, unable to find enough workers, had to offer higher wages amid runaway inflation. The “Great Quit” has thus seen millions of people leave their jobs to take advantage of more favorable conditions in another company.
Source: BFM TV
