The job market starts 2024 in style

The United States added an unexpected number of jobs last month, a boon for American workers that shows the job market remains remarkably strong after three years of expansion.

Employers 353,000 jobs added in January On a seasonally adjusted basis, the Labor Department reported Friday, the unemployment rate remained at 3.7 percent.

The report also provides an even brighter look at job growth for 2023, including revisions that add more than 100,000 to the figure previously calculated for December. In total, employers created 3.1 million jobs last year, more than the 2.7 million initially reported.

After the nation lost 14 percent of jobs at the start of the Covid-19 pandemic, the resilience of the labor market despite aggressive interest rate hikes caught economists off guard.

“I think everyone is surprised by the strength,” said Sara Rutledge, an independent economic consultant. “It’s almost like a ‘pinch me’ type scenario.”

Ms. Rutledge helped compile the latest report from the National Association for Business Economics. member surveywhich revealed growing optimism about the country’s ability to avoid a recession – representing a turnaround consumer sentiment metrics as inflation has eased.

January’s crop of jobs created, nearly twice what forecasters expected, reflects equally surprising strength in gross domestic product measures for the fourth quarter of 2023. It is also likely to reinforce the patient approach of the Federal Reserve on interest rates, given the increased risk. Wages could cause prices to rise more quickly.

Jerome H. Powell, the Fed chairman, signaled this week that rate cuts would not begin until at least May, citing a desire to see more evidence that inflation is falling toward its target.

“The fact that this figure has been below 4 percent for two years now is just a very clear and reliable signal that this is not just a tight labor market, but a tight labor market of reliably and persistently,” said Jared Bernstein, chairman of the White Council of the House of Economic Advisers.

January’s gains were also larger than those in other recent reports: Professional and business services accelerated to add 74,000 jobs, while health care added 70,000. The only major sector to shed of the workforce was that of mining and logging.

The average hourly wage also increased quickly, at 0.6 percent compared to December.

Analysts, however, cautioned against reading too much into the month’s overall gain, given the recent volatility in the survey’s initial estimates. Last January, for example, was well above the average for the entire year. And the latest report also contains some oddities.

The survey window was interrupted by bitter cold and snowstorms, which may have shortened the work week and increased hourly wages. Additionally, the addition of so many relatively well-paid white-collar workers may have pushed the average up. Hotels and restaurants, where wages are lower, have cut a few thousand jobs.

Agron Nicaj, a U.S. economist at banking and financial services firm MUFG, noted that job postings have increased in professional and business services in recent months. This could mean that January’s emergence will be short-lived, especially given the latest report from outplacement firm Challenger, Gray & Christmas which revealed layoff announcements were published last month after a quiet neighborhood.

“I would not expect a re-acceleration because of the relationships with industries that have developed this month and the openings,” Mr. Nicaj said. “I think this month reflects a replenishment of jobs that they haven’t been able to fill.”

And yet it’s clear that the new year began with an exceptionally good economy for many workers. Wages have been growing faster than their historical rates, and a sharp increase in productivity over the past three quarters has helped prevent those bigger wages from fueling higher prices. The number of open jobs still exceeds the number of people looking for work, even as new immigrants and women have joined or re-entered the workforce in unexpected numbers.

This trend could continue if rising wages continue to push people aside. The number of inactive people who want to work has increased appeared in recent monthsto 5.8 million, suggesting they could return if their payment exceeded the cost of childcare or a long commute.

Over the past year, most of the gains have been fueled by sectors that have been slower to recover from the pandemic – notably hospitality and local government – ​​or that have seen outsized momentum due to structural factors, such as population aging and pent-up demand for housing. Construction companies have continued to hire even in the face of high interest rates, as homeowners with low-rate mortgages generally stay put, leaving new homes as the only option for potential buyers.

Other categories that saw considerable growth in 2021 and 2022, including transportation, warehousing and information technology, returned to their pre-pandemic trends. Another handful of sectors, like retail, remained largely stable.

One of those who moved from a declining industry 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 industry was shrinking around him.

“It’s not just about job security, it’s also about the fear that your own career progression once married will be limited by the industry,” said Mr Moore, who has three children in a suburb of Houston. He left his position to take a position with an oil and gas services company that is moving into technologies such as geothermal energy and carbon capture. “They’re also in growth mode,” Mr. Moore added, “it’s just a different phase of the cycle.”

The new position also came with a 40 percent pay increase, which allowed her to start paying off her debts and consider buying a new home. “It’s like night and day,” Mr. Moore said.

Despite major layoff announcements at companies like UPS, Google and Microsoft, most employers are reluctant to let go of their workers, fearing they will be short-staffed if business picks up. Although the share of workers leaving their jobs has fallen back to normal levels after a sharp rise in 2022, Americans appear comfortable enough with their financial future to continue spending money.

This led to splurges at services such as travel agencies, which saw revenue fall to almost zero at the height of the pandemic. Although there are 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 the number of workers who have joined the industry in as independent contractors, often working part-time to supplement other jobs.

Kareem George, who runs a 10-person agency near Detroit that designs custom vacations, said his bookings are 20% higher than 2019 levels as clients increasingly demand luxury experiences like high-end dinners. range and private tours.

“I think they’re more confident in their ability to plan longer term,” said Mr. George, who plans to hire two more people in the coming year. “So they’re not so much thinking about, ‘I deserve it, I have to do it now,’ but also ‘I can also think about next year and the year after that.'”

In the coming months, economists expected the job market to return to what it was before the pandemic, without the giant job growth that followed the pandemic lockdowns. The latest figures could call this assessment into question.

Even the manufacturing sector, which has been in a slight recession for about a year, created 23,000 jobs. This reflects the optimism of recent years purchasing managers index for the manufacturing sector, which jumped unexpectedly last month. Timothy Fiore, chairman of the Institute for Supply Management committee overseeing the investigation, said this appears to be the start of a turnaround, albeit a slow one.

“Now we’re starting to gain altitude,” Mr. Fiore said. “It’s not a fighter pilot’s gain; this is the gain of the load plan.

Jim Tankersley reports contributed.