The president of the Federal Reserve (Fed), Jerome Powell, assured on Wednesday at a press conference, after maintaining interest rates at the highest level in more than two decades, that the United States labor market continues to show great strength. His words were an omen. The United States economy, which is gaining traction, added 353,000 jobs in January, a figure much higher than expected, despite the large number of layoffs in large technology companies.
The year starts with much more energy than expected and once again raises the question of when the Fed will decide to initiate rate cuts, whether there will be a reconsideration of the opportune moment. Powell assured that there would be cuts this year but did not show excessive haste.
Analysts anticipated a good level of hiring, but it did not exceed 185,000 jobs. The unemployment rate remains at 3.7%, also below the forecast 3.8%. Average salaries expanded 0.6% last month, double what was expected, to leave it at $34.55 per month. In the annual calculation, growth reaches 4.5%, instead of the 4.1% forecast, and more than one point above inflation.
After losing 14% of the country’s labor capacity due to the impact of the pandemic, the labor market has demonstrated its resilience in the last three years, under the government of Joe Biden and his “Bidenomics” or measures that conservatives so detest. , which has surprised economists in general with a vitality even greater than 2019. They predicted that the Fed’s restrictive policy to combat inflation, with eleven increases in the price of money to leave it at 5.25-5.50% , would cool hiring sharply.
It is clear that there are layoffs, but workers have the capacity to find new opportunities, analysts emphasize. In the immediate reaction to January’s surprising data, stocks slid slightly lower upon learning of this totally unexpected news, while Treasury bonds shot up.
The degree of satisfaction with the economy is beginning to show in surveys, although citizens consider that groceries are still more expensive than normal.
By sector, the driver of job growth was the professions and business services, with 74,000 hires. Others with significant contributions were healthcare (70,000), government administrations (36,000), social assistance (30,000) and manufacturing (23,000). On the other hand, mining and gas extraction lost jobs.
The report also indicates that job creation in December was even better than originally reported. In the revision it stands at 333,000, an increase of 117,000 in relation to the initial estimate. November was also revised for the better, with 182,000 new jobs, 9,000 more.