Employers across the country launched an impressive hiring spree to start 2024, adding 353,000 new positions in January alone, the most recent indication of the economy's resilience in the face of the highest interest rates in two decades.
(Photo : by Spencer Platt/Getty Images)Employers across the country launched an impressive hiring spree to start 2024, adding 353,000 new positions in January alone—the most recent indication of the economy's resilience in the face of the highest interest rates in two decades.
According to Friday's official data, the number of new jobs created this month exceeded the 333,000 gained in December, which was also significantly revised higher. This month's employment growth was almost twice as large as analysts had forecast. At 3.7%, the unemployment rate remained slightly above a half-century low.
Pay increased quite quickly in January as well. The average hourly wage increased by 4.5% from January 2023 and by a sharp 0.6% from December, the largest monthly advance in almost two years. The robust increase in hiring and wages may make the Federal Reserve's plan to start reducing interest rates later more difficult or take longer to complete.
The most recent gains demonstrated companies' readiness to continue employing in order to keep up with consumer spending. It happens at a time when opinions on President Joe Biden's economic leadership are playing a major role in the increasingly intense presidential race.
Public surveys reveal a general unhappiness, mainly since most costs are still much higher than before the epidemic, despite a considerable slowdown in inflation. However, several recent polls indicate that popular acceptance is progressively rising.
With Chair Jerome Powell stating, "the economy is performing well, the labor market remains strong," the Fed acknowledged the resilience of the economy this week and made it plain that, although it is getting closer to a long-awaited move toward interest rate reduction, it is not in a rush to do so.
The specifics in Friday's jobs data suggested widespread increases in hiring throughout the economy. There were 74,000 more positions in the professional and business services sector, which employs managers and technical personnel. Added were 70,000 from healthcare businesses, 45,000 from retailers, 36,000 from all levels of government, and 23,000 from manufacturing.
This is the longest sequence of sub 4% unemployment since the 1960s, having occurred for the last two years.
Insights from Acting Labor Secretary and Job Market Analyst
Julie Su, the acting labor secretary, dismissed worries that the salary increase from last month may lead to inflation.
Chief economist Julia Pollak of job marketplace ZipRecruiter pointed out that not all of the January report's findings aligned with the company's vision of gangbuster employment growth. She cited, for instance, the fact that Americans worked 34.1 hours on average per week last month, the lowest amount since 2010, apart from the COVID-19 recession.
Nevertheless, she hypothesized that the drop in work hours may just be the result of January's winter storms, which kept some workers home from the office.
Starting in March 2022, the Fed increased its target rate eleven times in an effort to combat inflation. It was generally anticipated that the increased borrowing rates would increase joblessness and probably spark a recession.
However, the economy has created enough new jobs to stave off a recession without raising the risk of inflation. Throughout 2023, inflation decreased, increasing the likelihood that the Fed would accomplish a "soft landing"-that is, control inflation without sending the economy into collapse.
Given January's massive employment growth, the Fed, which sets the interest rate on a number of consumer and commercial loans, will almost certainly go cautiously when lowering its benchmark rate. It appears that a rate decrease in March is no longer feasible.
Some people are worried that a slew of high-profile layoff announcements from companies like UPS, Google, and Amazon might signal the beginning of a wave of employment losses.
However, in comparison to the sizeable work force of the country, the recent layoffs haven't been substantial enough to have an impact on the employment market as a whole. In the past, there have been few layoffs, strong hiring, and an unemployment rate that is consistent with a thriving economy.
