The US economy added 353,000 jobs in January, starting 2024 strong
The US economy added 353,000 jobs last month, according to Bureau of Labor Statistics data released on Friday, setting a new record. Stronger than expected Gains to start 2024 and underscore the resilience of the US economy in an election year.
The unemployment rate remained at 3.7% compared to the previous month. It is the 24th straight month that the country’s unemployment rate has fallen below 4%.
“The fact that the unemployment rate has been below 4% for 24 months in a row for the first time since 1967 is really remarkable,” Joe Brusuelas, chief economist and director of RSM US, told CNN. “And that’s the word I keep saying as I look at this report: ‘This is fantastic.’ ‘Awesome’ is the takeaway here.”
More than a year ago, it seemed certain that the labor market would feel the effects – and You will probably be reeling from – The Federal Reserve’s aggressive campaign to raise interest rates. But 11 spikes and four stops laterThe US labor market is recording one of the longest periods of expansion this century.
January’s job gains dashed market expectations that the Fed would cut its interest rate sooner rather than later, perhaps as early as March, and that the central bank would cut as many as six times in 2024. The likelihood that investors would cut the rate in March fell from 38%. To less than 20% on Friday, according to CME FedWatch tool.
However, a stronger than expected result should help consolidate Americans’ lukewarm feelings about the economy. Brusuelas said the Fed should not deviate from its current path, as officials have telegraphed three interest rate cuts that will occur this year.
“The Fed is going to have to manage expectations very carefully here going forward,” he said. Powell noted that the central bank wants to cut — and now “it’s not just a question of if, but when.”
Upside down surprise
The hiring process accelerated from December, which itself was much stronger employment growth than previously estimated. December’s job gains were revised upward by 117,000 to a total of 333,000 for the month. November was also revised up, but by only 9,000 jobs, to 182,000 net jobs.
January’s gains worsened economists’ expectations: Consensus forecasts called for a net gain of 176,500 jobs last month, according to FactSet.
However, economists warned that the January report is among the most difficult to predict because it is typically a big month for job losses (with seasonal workers being laid off after the holidays and other companies taking some austerity measures in the new year). Additionally, the BLS applies new seasonal adjustment factors at the beginning of the year to help smooth the data and better understand trends.
For these reasons, some economists told CNN this week that January is likely to deliver an upside surprise.
They got one.
Where job growth occurred
Most major industries — except mining and logging — added jobs in January, Bureau of Labor Statistics data showed.
Private education and health services continued to drive job growth, with an increase of 112,000 jobs. Health care and social assistance accounted for 100,400 of these, followed by professional and business services with 74,000 and retail trade with 45,200.
The leisure and hospitality sector added just 11,000 jobs in January, but posted job gains for the 36th straight month, Bureau of Labor Statistics data showed. As of January, this vital services industry, battered at the start of the pandemic, was just 0.4% (75,000 jobs) away from reaching February 2020 employment levels.
During the pandemic recovery, entertainment, hospitality and other services companies have benefited from Americans. Strong desires to spend money on experiences.
Over 150 applicants for 30 positions
In Minneapolis, Jillian Hiscock had little trouble finding the two dozen workers she needed for her new sports bar.
Hiscock is about a month away from opening A Bar of Their Own, a bar and restaurant that will feature exclusively women’s sporting events. The concept, which was inspired by industry pioneer The Sports Bra in Portland, Oregon, has received overwhelming support from the Twin Cities community since Hiscock pitched the idea last spring and ran a crowdfunding campaign to launch it.
The same was true of A Bar of Their Own’s recruiting efforts: it received 150 applications within two days for 25 to 30 job openings.
“It’s a good problem to have, but I just wanted to make sure we were realistic about who we could actually reach out to, given our schedule,” she said. “But yes, we had to shut it down in less than two days with more than five times the number of applicants we needed for our available positions.”
Applicants came from all walks of life and included people with restaurant experience as well as people who were unemployed or looking to switch jobs or even careers.
“Since things opened back up [following the pandemic]“We have a lot of people whose relationships with work have changed radically,” she said. “Showing up and doing something for someone who you feel doesn’t care about you as a human being is less interesting to people now, because we all know how quickly you can get away with it.”
She said people still want to achieve a better balance between their work lives and personal lives.
“People were really excited about it, and they didn’t just look at it as another job, they saw it as an opportunity to be part of something bigger,” she said.
The January jobs report also included the BLS’s final numbers Annual standard review From salary data. Job growth in the United States last year was actually weaker than initial estimates (by about 266 thousand jobs); However, this is not as weak Proposed preliminary standard estimates maybe you can be.
Even with these revisions, 2023 was a great year for job growth. Seasonally adjusted data showed that nearly 3.06 million jobs were added last year. Beyond the record-breaking 2021 and 2022, this is the highest annual job total since 1999 and 17th on records dating back to 1939, according to Bureau of Labor Statistics data.
Also among the surprises were wage gains, which rose 0.6% month-over-month and 4.5% year-over-year.
“This increases the risk that nominal wage growth will not decline to levels consistent with reaching the inflation target on a sustainable basis, especially as the labor force participation rate refuses to rise any further,” said Brian Coulton, chief economist at Fitch Ratings. In a memo issued Friday. “Wage growth at this rate, in a labor market this tight, is a problem for the Fed.”
Bury recession expectations
A strong labor market has been the basis for the increases in consumer spending – and strong economic growth – that the United States has seen in recent months. While companies have reined in hiring, people are starting to leave their jobs less often and wage gains have seen some decline, the slowing pace of inflation means that people’s salaries are finally able to go further than they have in years.
However, despite the strong economy, Americans were mostly pessimistic – although attitudes are rising. A new CNN poll The poll released Friday showed that 35% of Americans say things in the country today are going well. This is an improvement 28% felt positive about the situation Last fall.
The poll found that sentiment is strongly influenced by partisanship, with Democrats leading the rise.
While the estimated 4.5% annual earnings growth announced Friday may cause a mild headache for the Fed, it is ultimately good for the American psyche, Brusuelas said.
“This would put the last slack calls under six feet,” he said. “It’s about jobs, what people are earning, and this data reflects increases in productivity. Improved productivity leads to better jobs, better wages, and higher living standards. It’s the legendary tide that lifts all boats.”
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