The labor market exceeded all expectations in January in the United States and showed iron health, despite fears of economic slowdown and tens of thousands of layoffs in the technology sector, which did not prevent unemployment from reaching its lowest level since 1969.
In the first month of the year the world’s largest economy created 517,000 jobs, the Labor Department announced Friday.
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It is almost double that in December, when 260,000 jobs were createdaccording to upwardly revised data also published this Friday.
Analysts had expected almost a third of the result announced for January: 187,000 new jobs, according to the consensus compiled by Briefing.com.
With these numbers, the unemployment rate, which had been at its pre-pandemic level for several months (3.5%), the lowest in 50 years, drops even more, to 3.4% of the population economically active.
(That) more people reach the (labor) market, look for and find employment, is a positive sign
The specialists expected an unemployment rate of 3.6%. “Employment growth was across the board, in the leisure and hospitality sector, professional and business services, and health care.
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Employment also increased in the public sector, in part due to the return of workers after a strike,” the Department of Labor details in its statement.
President Joe Biden hailed the nation’s “highest job growth in history.” “We have created 12 million jobs since I took office” in 2020, he said at the White House.
That “more people reach the (labor) market, look for and find employment, is a positive sign for the future health of the economy,” when many economists fear a recession in 2023.
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Labor market remains strong despite stagnation
The employment market appears to be in iron health, despite the cooling of the economy caused by the increase in interest rates by the Federal Reserve (Fed, central bank), which tries to contain inflation by making credit more expensive and thus discouraging consumption and investment.
On Wednesday, the monthly ADP/Stanford Lab survey had reported a volume of jobs created in the private sector in sharp drop compared to Decemberessentially due to unfavorable weather conditions, with floods in California and snowfall in the center and east of the country.
But “we see a still strong job market outside of the weather,” ADP chief economist Nela Richardson said in publishing the report.
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Rising rates are, however, having an effect on rising wages, that moderates
For almost two years, due to labor shortages, companies have to propose higher wages to attract or even retain their employees, in the midst of escalating inflation.
The higher wages push up prices in the economy. The so-called “great resignation” saw millions of people leave their jobs to seek better conditions in other companies.
They warn that layoffs will continue
In the midst of these difficulties of a stressed labor market, companies try not to lay off employees who they had a hard time getting and they spent money to train.
The exception is the technology sector which, after hiring massively since the pandemic began due to increased demand for online services, it backs down and announces layoffs by the thousands, from Alphabet to Amazon, passing through Meta and Microsoft.
The trend is upward (of layoffs) and registrations (insurance) will continue
Other companies in other sectors are also beginning to make announcements about job cuts, such as the shipping firm FedEX or 3M, with a lot of demand for their services and products during the pandemic, and even the business bank Goldman Sachs.
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Despite these very high numbers of staff cuts, “layoffs as a whole (…) are few, and what we have registered in some sectors has not yet translated into an increase in new claims for unemployment insurance,” said Nancy Vanden Houten, an economist at Oxford Economics, on Thursday.
Registrations for these unemployment benefits even dropped in the last week of January, to their lowest level since April, according to data from the Labor Department.
But it is a matter of time before this changes, estimates Ian Shepherdson, chief economist at Pantheon Macroeconomics: “The trend is upward (of layoffs) and registrations (insurance) will continue.”
AFP
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