Current:Home > InvestThe U.S. created an extraordinary number of jobs in January. Here's a deeper look-DB Wealth Institute B2 Expert Reviews
The U.S. created an extraordinary number of jobs in January. Here's a deeper look
View Date:2024-12-23 22:35:36
It's Groundhog Day. And once again, the monthly jobs report has confounded forecasters.
U.S. employers added 353,000 jobs in January, according to a report from the Labor Department Friday. That's far more than analysts were expecting.
The job market has held up remarkably well, despite the Federal Reserve's effort to fight inflation with the highest interest rates in more than two decades.
The question is whether the Fed will see a shadow in the stronger-than-expected jobs market and extend our winter of elevated borrowing costs.
Policy makers might worry that such a strong labor market will keep prices higher for longer.
Here are four takeaways from Friday's report.
Demand for workers is still extraordinarily strong
Nearly every industry added jobs last month. Health care added 70,000 jobs. Business services added 74,000. Even construction and manufacturing — two industries that typically feel the drag of higher interest rates — continued to hire in January.
What's more, revised figures show job growth in November and December was stronger than initially reported.
Meanwhile, the unemployment rate held steady at a historically low 3.7%. It's been under 4% for two full years now.
More people are joining the workforce
Helping to balance the strong demand for labor is a growing supply of available workers.
Many people who were sidelined during the pandemic have since joined or re-joined the workforce — thanks in part to the possibility of remote work.
Nearly 23% of employees teleworked or worked from home last month — more than double the rate before the pandemic.
The share of people in their prime working years who are working or looking for work in January rose to 83.3%.
Immigration has also rebounded. The foreign-born workforce grew 4.3% last year, while the native-born workforce was virtually flat.
"Those two forces have significantly lowered the temperature in the labor market," said Federal Reserve Chair Jerome Powell this week. "It's still a good labor market for wages and for finding a job. But it's getting back into balance and that's what we want to see."
But the sizzling job market could delay a cut in interest rates
Powell said this week that he and his colleagues could start cutting interest rates this year if inflation continues to fall.
Powell cautioned, however, that a rate cut at the next Fed meeting in March is unlikely. It's probably even more unlikely after this stronger-than-expected jobs report, which showed average wages in January rising 4.5% from a year ago.
Although rising wages have not been a big driver of inflation, wage gains at that level could make it hard to get inflation all the way down to the Fed's target of 2%.
Before the jobs report, investors had been all but certain the Fed would cut interest rates by May. They're less confident now.
Productivity gains could make rising wages less worrisome
Two other reports from the Labor Department this week show less upward pressure on wages and prices.
One report tracks the labor costs borne by employers last year. It showed a smaller increase in October, November and December than the previous quarter. This "employment cost index" is considered a more reliable guide to labor expenses than the monthly wage data.
A separate report showed that workers' productivity rose by 3.2% in the fourth quarter. Rising productivity helps to offset rising wages, so employers can afford to pay more without raising prices.
"Productivity is the magic wand that keeps wages growing solidly without spiking inflation," said Nela Richardson, chief economist at the payroll processing company ADP.
veryGood! (817)
Related
- 'Full House' star Dave Coulier diagnosed with stage 3 cancer
- Put another nickel in: How Cincinnati helped make jukeboxes cool
- Clemson's Dabo Swinney: 'Maybe we need to lose a few games and lighten up the bandwagon'
- Lower house of Russian parliament votes to revoke ratification of global nuclear test ban
- See Megan Fox, Machine Gun Kelly, Brian Austin Green and Sharna Burgess' Blended Family Photos
- Prison guard warned that Danilo Cavalcante planned escape a month before he fled, emails show
- U.S. gets a C+ in retirement, on par with Kazakhstan and lagging other wealthy nations
- No charges for deputy who fatally shot 21-year-old during traffic stop
- FBI raids New York City apartment of Polymarket CEO Shayne Coplan, reports say
- Suspect in fatal shooting of 2 Swedes in Belgium shot dead by police, authorities say
Ranking
- Up to 20 human skulls found in man's discarded bags, home in New Mexico
- No place is safe in Gaza after Israel targets areas where civilians seek refuge, Palestinians say
- Supreme Court orders makers of gun parts to comply with federal ghost gun rules
- Martin Scorsese's Killers of the Flower Moon: A true story of love and evil
- California researchers discover mysterious, gelatinous new sea slug
- Instead of coming face-to-face with Michael Cohen, Trump confronts emails and spreadsheets at New York trial
- ADL official on anti-Jewish, Muslim hate: 'Our fight is often one that is together'
- Nicole Avant says she found inspiration in mother's final text message before her death: I don't believe in coincidences
Recommendation
-
NYC bans unusual practice of forcing tenants to pay real estate brokers hired by landlords
-
Four killed in multicar crash on Pacific Coast Highway in Malibu
-
Bike riding in middle school may boost mental health, study finds
-
Latinos create opportunities for their community in cultural institutions
-
Mississippi expects only a small growth in state budget
-
Arkansas orders Chinese company’s subsidiary to divest itself of agricultural land
-
Jax Taylor Reveals He’s in “Contract Negotiations” With Brittany for Baby No. 2
-
How does the U.S. retirement system stack up against other countries? Just above average.