The United States added an unexpectedly large amount of jobs last month, a boon for American workers that shows the job market remains remarkably strong after three years of expansion.
Employers added a seasonally adjusted 353,000 jobs in January, the Labor Department reported Friday, and the unemployment rate remained at 3.7 percent.
The report also gave an even brighter picture of job growth for 2023, including revisions that increased the previous figure for December by more than 100,000. Overall, employers added 3.1 million jobs last year, more than the 2.7 million originally reported.
After the loss of 14 percent of the country’s jobs at the start of the Covid-19 pandemic, the resilience of the labor market despite aggressive interest rate hikes has surprised economists.
“I think everyone is surprised by the strength,” said Sara Rutledge, an independent economic adviser. “It’s almost like I’m being pinched.”
Ms. Rutledge helped tabulate the National Association for Business Economics’ latest membership survey, which found increasing optimism that the country would avoid a recession – reflecting a turnaround in consumer sentiment as inflation has eased.
The number of new jobs in January, nearly double what forecasters expected, reflected similarly surprising strength in gross domestic product measurements for the fourth quarter of 2023. Given the increased risk, this is also likely to reinforce the Federal Reserve’s patient approach to interest rates, and wages could push prices higher more quickly.
Fed Chairman Jerome Powell signaled this week that rate cuts would not begin until May at the earliest, citing a desire to see more evidence that inflation is falling back to its target.
“The fact that this has been below 4 percent for two years in a row is just a very clear and reliable signal that this is not just a tight labor market, but a reliably and persistently tight labor market,” said Jared Bernstein, chairman the House of Representatives White Council of Economic Advisers.
January’s gains were also broader than other recent reports: Professional and business services added 74,000 jobs, while health care added 70,000. The only major sector where labor was cut was mining and logging.
Average hourly wages also rose quickly, up 0.6 percent compared to December.
However, given recent volatility in initial survey estimates, analysts cautioned against reading too much into the month’s overall gain. For example, last January was much stronger than the annual average. And the latest report also contains some curiosities.
The poll window was disrupted by bitter cold and snowstorms, potentially shortening the workweek and increasing hourly wages. The addition of so many relatively well-paid employees may also have pushed up the average. Hotels and restaurants where wages are lower lose several thousand jobs.
Agron Nicaj, a U.S. economist at banking and financial services firm MUFG, noted that job postings in professional and business services have increased in recent months. That could mean January’s surge will be short-lived, especially given outplacement firm Challenger, Gray & Christmas’s recent report that the number of layoff announcements rose sharply last month after a quiet quarter.
“Based on the industry relationships that have grown this month and the openings, I would not expect another acceleration,” Mr. Nicaj said. “I think this month reflects a refilling of positions that they were unable to fill.”
And yet it is clear that the new year began with an exceptionally good economy for many employees. Wages have risen faster than in the past, and strong productivity growth over the past three quarters has helped keep higher wages from translating into higher prices. The number of job vacancies still exceeds the number of job seekers, even as new immigrants and women have entered or re-entered the workforce in unexpected numbers.
This trend could continue if higher wages continue to push people off the sidelines. The number of people not working and looking for a job has risen to 5.8 million in recent months, suggesting they could get back in if the salary outweighs the cost of child care or a long commute.
Last year, most of the gains were driven by sectors that either took longer to recover from the pandemic – including hospitality and local government – or showed outsized momentum due to structural factors such as aging populations and pent-up demand for housing . Despite high interest rates, construction companies have continued to hire because homeowners with low mortgages tend to stay put, leaving new homes as the only option for potential buyers.
Other categories that saw tremendous growth in 2021 and 2022, including transportation, warehousing and information technology, have reverted to their pre-pandemic trends. Other few sectors, such as retail, remained largely unchanged.
One of those who jumped from a shrinking sector to a more stable one is Galvin Moore, 33, who worked in information technology for a freight broker until last fall, when he noticed the trucking sector shrinking around him.
“It’s not just about job security, but also the fear that one’s career growth will be limited by the industry,” said Mr. Moore, who is married with three children in suburban Houston. He moved to an oil and gas services company working on technologies such as geothermal energy and carbon capture. “They’re in growth mode too,” Mr Moore added, “it’s just a different phase of the cycle.”
The new job also came with a 40 percent raise, allowing him to pay off his debts and consider buying a new home. “It’s like night and day,” Mr. Moore said.
Despite high-profile announcements of layoffs at companies like UPS, Google and Microsoft, most employers are hesitant to part ways with their workers because they fear they will be short-staffed when business picks up. Although the share of workers quitting their jobs has returned to normal levels after rising in 2022, Americans appear to be satisfied enough with their financial future to continue spending.
This has resulted in services such as travel agencies, whose revenues fell to almost nothing during the worst phase of the pandemic, being severely affected. Although still a few thousand employees below 2019 levels, the American Society of Travel Advisors says Bureau of Labor Statistics data does not reflect an increase in workers who have entered the industry as independent contractors, often working part-time to complement other jobs.
Kareem George, who runs a 10-person agency near Detroit that designs custom trips, said his bookings were 20 percent higher than 2019 levels, with clients increasingly asking for luxury experiences like world-class dinners and private tours.
“I think there is more confidence that they can plan for the longer term,” said Mr. George, who expects to hire two more people next year. “So you’re not thinking so much about ‘I deserve it, I have to do it now’, but also ‘I can think about next year and the year after that’.”
Economists had expected the labor market to more closely resemble pre-pandemic conditions in the coming months, without the huge job growth that followed the pandemic lockdowns. The latest figures could call this assessment into question.
Even in the manufacturing sector, which has been in a slight recession for about a year, 23,000 jobs were created. This reflects optimism in the latest manufacturing PMI, which unexpectedly rose last month. Timothy Fiore, chairman of the Institute for Supply Management committee overseeing the survey, said it appears to be the beginning of a turnaround, albeit a slow one.
“Now we’re starting to gain altitude,” Mr. Fiore said. “It’s not a win for fighter pilots; It’s a win for cargo aircraft.”
Jim Tankersley contributed reporting.
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2024-02-02 21:47:26
www.nytimes.com
