Business NEWS

    News that matters

    U.S. Job Market Defies Expectations, Unemployment Rate Drops to 1969 Low

    /
    /
    /
    77 Views

    The U.S. job market defied expectations in January, with 517,000 jobs added to the economy—the biggest increase in nonfarm payrolls since July 2022.[0] The unemployment rate dropped to 3.4%, a rate not seen since 1969, and significantly lower than the expected 3.6%.[1]

    The Federal Reserve has been attempting to slow the economy and bring down inflation since March 2022, when it began a rate hike campaign.[2] So far, wage growth has slowed and inflation has fallen faster than the Fed expected—without any of the increased unemployment economists thought would happen as a consequence.[2]

    Average hourly earnings rose by 0.3%, and on an annual basis, wages rose 4.4% in January—down slightly from 4.6% in December. The percentage of people in the labor force rose to 62.4%.[3]

    The surge in job creation comes despite the Federal Reserve's efforts to weaken the labor market.[4] The Fed raised its benchmark interest rate eight times since March 2022, most recently with a 0.25% increase on Wednesday.[5]

    CME Group data showed that traders were more confident that the Federal Reserve would vote in favor of a 0.25% interest rate increase at the March meeting, with the probability of this happening rising to 94.5%.[5] Experts believe there will be an additional rise in the central bank's benchmark funds rate in either May or June, with a target range of 5%-5.25%.[6]

    The average hourly earnings increased by 0.3% in January, a slight decrease from the 0.4% revision upwardly reported in December. Hourly earnings have increased by 4.4% since the start of the year in January.[7]

    The number of jobs added during the months of November and December were revised upwards by a total of 71,000.[8] The revisions from November were from 256,000 to 290,000 and from 223,000 to 260,000.[9]

    The leisure and hospitality sector, which saw one of the greatest impacts of the pandemic, continued its positive trend of recovery in January, adding 128,000 jobs.[5] The sector's employment is still 495,000 jobs or 2.9% lower than it was in February 2020 prior to the pandemic, yet the gap is gradually decreasing.[3]

    Professional and business services (82,000), government (74,000) and health care (58,000) saw significant gains, as did retail (30,000) and construction (25,000).[6]

    0. “Economy Adds 517000 Jobs in January, More Than Double Estimates” U.S. News & World Report, 3 Feb. 2023, https://www.usnews.com/news/economy/articles/2023-02-03/economy-adds-517-000-jobs-in-january-more-than-double-estimates

    1. “Labor Market Added 517,000 Jobs In January—Unemployment Rate Falls To 54-Year Low Of 3.4%” Forbes, 3 Feb. 2023, https://www.forbes.com/sites/jonathanponciano/2023/02/03/jobs-report-january/

    2. “The Job Market Is Defying Economic Gravity” Investopedia, 3 Feb. 2023, https://www.investopedia.com/the-job-market-is-defying-economic-gravity-7105470

    3. “Jobs report: U.S. economy adds 517,000 jobs in January, unemployment rate falls to 3.4% as labor market stuns” Yahoo News, 3 Feb. 2023, https://news.yahoo.com/january-jobs-report-labor-market-economy-february-3-2023-125436675.html

    4. “Jobs Report Shows Massive Hiring in January: What the Experts Are Saying” Kiplinger's Personal Finance, 3 Feb. 2023, https://www.kiplinger.com/investing/jobs-report-shows-massive-hiring-in-january-what-the-experts-are-saying

    5. “U.S. added 517,000 jobs in January as employers drove unexpected hiring surge” NBC News, 3 Feb. 2023, https://www.nbcnews.com/business/business-news/us-added-517000-jobs-january-much-better-187000-expected-rcna68977

    6. “Jobs report shows increase of 517,000 in January, crushing estimates, as unemployment rate hit 53-year low” CNBC, 3 Feb. 2023, https://www.cnbc.com/2023/02/03/jobs-report-january-2023-.html

    7. “Blockbuster jobs data reflects a mind-blowing labor market” Axios, 3 Feb. 2023, https://www.axios.com/2023/02/03/jobs-report-mind-blowing-labor-market

    8. “U.S. employers added a whopping 517,000 jobs in January” NPR, 3 Feb. 2023, https://www.npr.org/2023/02/03/1153912911/jobs-labor-unemployment-wages-inflation-federal-reserve

    9. “U.S. jobs report January: 517,000 jobs added despite recession fears” USA TODAY, 3 Feb. 2023, https://www.usatoday.com/story/money/economy/2023/02/03/january-jobs-report-today-unemployment-rate/11170452002

    Leave a Comment

    This div height required for enabling the sticky sidebar