Crazy. There is no word that defines the surprise that all the forecasters got this Friday. The labor market in the United States was supposed to grow, but in a modest way and slowed down by the effect of the restrictive monetary policy of the Federal Reserve (Fed), the central bank, to combat inflation.
Not one of the analysts, no matter how resilient the US labor market is, expected 517,000 jobs to be created in January, a weak month in itself, (187,000 had been forecast), despite starting to count the massive layoffs in the technological sector, among the giants of the sector such as Google, Microsoft or Amazon. This means 260,000 more jobs than in December, the month of purchases and spending. The unemployment rate fell from 3.6% to 3.4%, the lowest level since May 1969, even before man stepped on the Moon, and that is a long way off.
These powerful numbers contradict all expectations and underscore the challenge facing the Fed, which has raised the price of money eight consecutive hikes to 4.50%-4.75% since last March to cool rising prices. Jerome Powell, chairman of the Federal Reserve, said on Wednesday, after announcing the latest rate hike of 0.25%, that the containment of inflation was beginning to bear fruit and that everything pointed to a restriction in the labor market, despite its robustness, and also wages.
But median wages expanded by amounts out of line with the Fed. In January, wages rose an average of 0.3%, or 4.4% from a year ago, above expectations.
So the rate of salary improvement and, above all, job creation continue their unstoppable march, data that those responsible for the central bank are watching very carefully.
The report from the Labor Department also indicates that employment grew more strongly than expected. To the revision of the previous counts of last year, another 568,000 occupations have been added. The increase in January represents the largest job gain since July 2022. In this world of contrasts, the stock markets reacted downward when learning about these results.
The increase occurred through various sectors. Leisure and hospitality (hotels, restaurants, bars) made the greatest contribution, with 128,000 jobs. Other significant numbers were in the professional sector and business services (82,000), government administration (74,000) or health and health care (58,000).
Despite this reality check, there were analysts who maintained their position and specified that the labor market is going to cool down considerably throughout 2023.
