Wage growth also showed strength, with average hourly earnings increasing by 0.6%, double the monthly estimate. On an annual basis, wages jumped 4.5%, well above expectations of 4.1%. The wage gains came amid a decline in average working hours to 34.1, or 0.2 hours less.
Job growth was broad-based during the month, led by professional and business services with 74,000. Other significant contributors included health care (70,000), retail (45,000), government (36,000), social assistance (30,000), and manufacturing (23,000).
The report also noted that December’s job gains were much better than originally reported. The month posted a profit of 333,000, representing an upward revision of 117,000 from the initial estimate. November was also revised upward, to 182,000, or 9,000 above the last estimate.
While the report showed the resilience of the US economy, it may also raise questions about when the Federal Reserve will be able to lower interest rates.
The January jobs report comes as economists and policymakers closely monitor employment numbers for the trend in the larger economy. Some recent high-profile layoffs have raised questions about the sustainability of what has been a strong hiring trend.
However, broader layoff numbers, such as the Labor Department’s report on initial unemployment claims, show that companies are reluctant to let go of workers in such a tight labor market.
GDP growth also defied expectations.
The fourth quarter saw GDP increase at a strong annual pace of 3.3%, concluding a year in which the economy defied widespread expectations of a recession. The growth came despite the Federal Reserve raising interest rates as it sought to reduce inflation.
The Federal Reserve Bank of Atlanta’s GDP tracker is pointing to a 4.2% gain in the first quarter of 2024, albeit with limited data on where things are headed during the first three months of the year.
The dynamics of the economy, employment and inflation form a complex picture as the Fed seeks to ease monetary policy. Earlier this week, the Fed again held short-term borrowing costs steady and signaled that interest rate cuts may be in the future but not until inflation shows more signs of slowing.
Chairman Jerome Powell noted in his post-meeting news conference that the central bank does not have a “mandate for growth” and said central bankers remain concerned about the impact of high inflation on consumers, particularly those at the lower end of the income scale. .
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