The job market in the United States defied forecasts in January, showing iron health despite fears of a slowdown and announcements of layoffs, with a rebound in job creations, and an unemployment rate at an all-time low since 1969.
In the first month of the year, 517,000 jobs were created, the Labor Department said Friday.
“Job growth was broad-based, led by gains in recreation and hospitality, professional and business services, and health care,” the Department of Labor said in its statement.
This is nearly double the 260,000 jobs that were created in December, according to upwardly revised data also released on Friday. Analysts, on the other hand, expected a slowdown, to 187,000, according to the consensus of Briefing.com.
“The pace of job growth had tended to decline over the past six months, but January broke that trend,” said MBA chief economist Mike Fratantoni.
As for the unemployment rate, which had already returned for several months to its pre-pandemic level, the lowest in 50 years, it fell a little further, to 3.4% (-0.1 point).
“If economic commentators have been consistent on two counts since (Joe Biden) became president, it is: (1) predicting a recession within the next six months, and (2) getting it wrong every time,” said quipped his chief of staff, Ron Klain, on Twitter.
“Big Resignation”
“The labor market is far too strong for the good health of the economy! However, warns Kathy Bostjancic, chief economist for the Nationwide insurance company.
This indeed, paradoxically, increases the risk of recession. Because the American central bank, the Fed, should want to continue to raise its rates, to slow down the economy, and thus be sure to bring in the nails too high inflation.
The figures for job creation in the private sector alone, published on Wednesday, had however shown a sharp slowdown, according to the monthly survey ADP / Stanford Lab.
But that was due to adverse weather conditions, including devastating California floods. And make no mistake about it: the labor market is “still solid apart from the weather consequences”, indicated the chief economist of ADP, Nela Richardson.
A sign, all the same, tends to show that the situation is changing: the increase in wages is now less strong, 4.4% compared to January 2023, against 4.8% in December over one year. Wage growth had climbed to 5.9% year on year in March.
For almost two years in fact, the ball has been in the court of the employees, as the country lacks manpower. Companies, unable to find enough workers, had to offer higher wages in the midst of soaring inflation.
The “Great Resignation” has thus seen millions of people leave their jobs to take advantage of more favorable conditions in another company.
A matter of time
Scalded by these difficulties and while the economy is showing signs of slowing down, employers are now reluctant to lay off these employees they have had so much trouble recruiting and have had to train.
Companies in the “tech” sector, however, which had recruited with a vengeance since the start of the pandemic, are seeing the situation turn around and layoff announcements are multiplying, within the parent company of Google, Alphabet, Amazon , Meta, or even Microsoft.
But elsewhere, it is also FedEx, 3M, or even Goldman Sachs, which are parting with some of their staff.
Despite this, “the layoffs on the whole […] remain weak, and (those) that we see in certain sectors have not yet translated into an increase in new unemployment insurance claims, ”said Nancy Vanden Houten, economist for Oxford Economics, on Thursday.
Jobless claims, in fact, even fell in the last week of January, falling to their lowest level since April, the Labor Department had announced.