Surprising rebound in US employment in January

Surprising rebound in US employment in January

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 creation and an unemployment rate at an all-time low since 1969.

President Joe Biden hailed “the strongest job growth in history” and “the lowest unemployment rate in 54 years,” a sign he assures us his economic program is “working.”

“Since I took office, we’ve created 12 million jobs,” he said from the White House, “Unemployment among African Americans and Hispanics is at rock bottom.”

The Democrat sees “more people entering the market, looking for and getting jobs, as a positive sign of the health of the economy going forward” as many economists fear a recession in 2023.

“If economic commentators since (Joe Biden) President have been consistent on two counts, it’s: (1) predicting a recession within the next six months, and (2) getting it wrong every time,” he said earlier, his chief of staff Ron Klain joked on Twitter.

In the first month of the year, 517,000 jobs were created, the Ministry of Labor announced on Friday.

“Job growth has been widespread,” the Labor Department said in its press release, naming leisure and hospitality, professional and business services, and health care in particular.

That’s nearly double the 260,000 jobs added in December, according to upwardly revised data also released on Friday. Analysts, meanwhile, were expecting a slowdown to 187K, according to consensus.

“The pace of job growth has trended downward over the past six months, but January broke that trend,” said MBA chief economist Mike Fratantoni.

The unemployment rate, which had already returned to pre-pandemic levels a few months ago, the lowest in 50 years, fell a little further to 3.4% (-0.1 points).

“The job market is far too strong for the health of the economy!” warns Kathy Bostjancic, chief economist at insurance company Nationwide.

Indeed, paradoxically, this increases the risk of a recession. Because the American Federal Reserve should want to raise its interest rates further in order to slow down the economy and thus be sure to nail excessive inflation.

However, job creation in the private sector alone had slowed, according to the monthly ADP/Stanford Lab survey, released Wednesday.

But that was due to unfavorable weather conditions and the job market remains “solid”, according to ADP chief economist Nela Richardson.

However, one sign tends to suggest that the situation is changing: wage growth is now less steep, +4.4% over one year, compared to +4.8% in December and even +5.9% in March last year.

The country has been short of workers for almost two years. Firms unable to find enough workers had to raise wages amid rising inflation.

For example, the “Big Resignation” caused millions of people to leave their jobs to take advantage of more favorable terms at another company.

Faced with these difficulties, and while the economy is showing signs of slowing down, employers are now reluctant to lay off the workers they have had such difficulty hiring and training.

However, “tech” companies, which have been recruiting with a vengeance since the pandemic began, are seeing the situation reverse and layoff announcements multiply, from Google’s parent company Alphabet, to Amazon, Meta or even Microsoft.

Elsewhere, FedEx, 3M or even Goldman Sachs are laying off some of their employees.

Nonetheless, “layoffs remain overall (…) low,” noted Nancy Vanden Houten, economist at Oxford Economics, on Thursday.

Weekly jobless claims even fell to their lowest level since April 2022 at the end of January, according to the Labor Department.