U.S. employers added 353,000 jobs in January, nearly doubling what economist had predicted and demonstrating employers’ willingness to keep hiring to meet steady consumer spending. The unemployment rate remained flat at 3.7% despite predictions of a slight increase. Year-over-year wage growth rose to 4.5%.
The Numbers
353,000: U.S. employers added 353,000 jobs in January.
3.7%: The unemployment rate remained unchanged at 3.7%.
4.5%: Wages rose 4.5% over the past year.
The Good
January’s jobs report defied expectations with job growth nearly doubling forecasts, the unemployment rate holding steady and wages outpacing predictions. Experts at The Wall Street Journal also point out that while the bulk of hiring in 2023 came from just three sectors: government, healthcare, and restaurants and hotels, job gains in January broadened, with nearly two-thirds of private sector industries adding to their payroll or keeping them steady. January’s report adds to months of data showing that economic growth is remaining stable, if not accelerating. And after being hit hard by inflation, Americans are finally starting to feel better about the economy, according to a University of Michigan survey which showed a 29% improvement in consumer sentiment compared to November 2023, the biggest two-month increase since 1991.
The Bad
With few signs of weakness, the January report was described by many as universally positive. Yet, some analysts have argued that after such a big rally, further gains will be more difficult to come by. Further, despite markets buoying, stock gains did not extend across the entire market, with shares of smaller companies falling in general. These businesses may continue to suffer if the Fed takes longer to cut rates, which as reported by the New York Times, they are now in no hurry to do.
The Unknown
January jobs reports have been somewhat hard to read since the onset of the pandemic. While job gains have consistently been above economist’s expectations for the past few years, some believe that may be the result of shifts in seasonal hiring patterns, according to The Wall Street Journal. Further, recent high-profile layoffs from companies like UPS signal for some that demand for workers may cool in the coming months, but for now as reported by Bloomberg, there’s still plenty of evidence that employers are still hiring.
Conclusion
For months, U.S. jobs data has pointed to a gradually cooling labor market, which along with receding inflation led experts to believe the Fed would start cutting interest rates in early 2024. However, this “blockbuster” January report has turned that narrative on its head, suggesting a reacceleration that is likely to delay any rate cuts, at least for the time being.
