In January, employers added 517,000 jobs despite the Federal Reserve’s aggressive efforts to restrict growth and contain inflation with higher interest rates.
The unemployment rate has reached its lowest level since 1969, at 3.4%. Even though most economists anticipate an impending recession, Friday’s official report added to the picture of a strong labor market, with low unemployment, relatively few layoffs, and numerous job vacancies.
US Jobs Grow To 5-Month High
Despite being beneficial for employees, companies’ consistent demand for labor has accelerated wage rise and contributed to excessive inflation.
The Fed’s inflation watchers may find some solace in January’s wage figures. The average hourly wage increased by 4.4% from a year ago in January, which was slower than the 4.8% increase in December. And from December to January, wages increased by 0.3%, less than the 0.4% increase from the previous month.
Friday, the agency raised its estimate of employment increases in November and December by a total of 71,000, in addition to the explosive job growth recorded for January.
The proportion of persons who either held a job or were looking for one increased to 62.4%, the so-called labor force participation rate. This was the highest level since March of last year, although it was still far lower than pre-pandemic levels.
January’s employment growth was significantly higher than December’s total of 260,000, extending a string of robust hiring gains that has stoked concerns at the Fed about inflationary pressures.
Since March, the Fed has increased its benchmark rate eight times in an effort to limit inflation, which reached a four-decade peak last year but has since moderated.
Companies are still looking for new employees and clinging to the ones they have. Even though many analysts expect the onset of a recession, the majority of workers are experiencing an unusually high level of job security.
This is despite the fact that certain prominent tech businesses, such as Microsoft, Google, Amazon, and others, have recently laid off employees.
For the entirety of 2022, the economy added an average of 375,000 jobs per month. This pace was sufficient to have contributed to the excruciating inflation the United States has experienced over the past four decades, the worst of its kind in that time frame. A tight labor market typically exerts upward pressure on wages, which contributes to inflation.
Read more: First-generation iPhone is predicted to sell for over $50,000 at an auction
US Aims To Combat Unemployment Crisis
The Fed has steadily increased borrowing rates, most notably on Wednesday, in an effort to temper the labor market, the economy, and as a result, inflation. Since reaching a peak of 9.1% in June, measures of year-over-year consumer inflation have slowly declined.
But at 6.5% in December, inflation remains well above the Fed’s 2% objective, prompting policymakers at the central bank to reiterate their intention to continue hiking interest rates for at least a few more months.
The Fed aims to achieve a soft landing or a slowdown in the economy that is just sufficient to reduce inflation without precipitating a recession. The officials expect that firms can moderate wage increases and inflationary pressures by reducing the number of job opportunities, but not necessarily by laying off a large number of workers.
Another sign that workers have great job security is the number of people who apply for unemployment benefits each week. In order to forecast the future of the labor market, economists utilize this number, which serves as a proxy for layoffs.
The government said Thursday that the number of first requests for unemployment insurance dropped to its lowest level since April.
Despite a regular stream of headline-making layoff announcements, the rate of unemployment compensation applicants has remained abysmally low. Meta, the parent company of Facebook, is eliminating 11,000 positions, Amazon 18,000, Microsoft 10,000, and Google 12,000.
Some analysts believe that many laid-off people are not registering for unemployment benefits because they can simply find new employment.
Read more: Activision Blizzard deal: ‘The Last of Us’ proves acquisition shouldn’t be a problem
