In January, job growth rose sharply in the United States. This is happening against a backdrop of continued labor market resilience. This new slowdown in wage growth should restore the Fed’s confidence in its fight against inflation.
A closely watched Labor Department survey of such businesses, released on Friday, showed the number of nonfarm employees increased by 517,000 last month.
December data was also adjusted upwards, showing the addition of 260,000 jobs, compared to 223,000 previously reported.
The average hourly wage rose 0.3% after rising 0.4% in December.
Annual wage growth fell from 4.8% to 4.4% in December.
Many economists predicted that wages would increase by 4.3% year on year and that the number of jobs would increase by 185,000 (salary forecasts ranged from an increase of 125,000 to 305,000 jobs).
In a January report, the Labor Department’s Bureau of Labor Statistics (BLS) released its annual review of “benchmark” wages and updated the formulas the Bureau uses to smooth out regular seasonal fluctuations in surveys. with businesses.
In addition, the Bureau revised its industry classification system, following which approximately 10% of jobs were reclassified and assigned to other industries. In addition, new household population estimates have been introduced, on the basis of which the unemployment rate is calculated.
As a result, the unemployment rate in January was 3.4%, lower than in December (3.5%).
The jobs report allows the US central bank, focused on controlling wage inflation, to maintain a moderate pace of rate hikes and reduce the risk of recession this year.
Fed Chairman Jerome Powell told reporters on Wednesday that “the economy can return to 2% inflation without a significant recession or a sharp rise in unemployment.”
Given that wages are falling and inflation tends to fall, economists share this view.
Government data this week showed there were 11 million jobs in the country at the end of December, or 1.9 jobs for every unemployed person.
The Fed on Wednesday raised its key rate by 25 basis points to a range of 4.50 to 4.75%, pledging to “continue to increase” the cost of borrowing.
