MANHATTAN (CN) — Surprising just about everybody, the U.S. economy added 353,000 jobs last month, according to federal officials, despite indications elsewhere the labor market is cooling.
The report on Friday by the U.S. Bureau of Labor Statistics was nearly double the 185,000 forecast by most economists and much better than the 216,000 jobs added in December. The unemployment rate also hovered at 3.7%, which is less than the 3.8% experts predicted.
Even more surprising — and welcome for all except investors hoping for interest rate cuts — is that the jobs reports from November and December were both revised upward. November was amended to add an additional 9,000 jobs, while December was changed to a number 117,000 jobs higher than originally reported.
“This morning’s report was another blowout,” said Chris Zaccarelli, chief investment officer at the Independent Advisor Alliance. “Just as many were caught off guard by the recession that never appeared in 2023, there’s always the possibility that another year will go by without a recession. And if that’s the case, it’s hard to see a new bear market starting without one.”
According to the bureau's report, the private sector accounted for the vast majority of additional jobs, while government jobs ticked up only by 36,000. Manufacturing stood out with 23,000 jobs gained, while retail trade picked up more than 45,000 jobs and professional and business services gained 74,000 positions. Hourly earnings also increased for all employees by 0.6%, better than expected.
The only negative in the report was the average weekly hours dropping slightly from 34.3 in December to 34.1 last month, with overtime hours also decreasing slightly among manufacturers.
“Outside of Covid, that is the lowest since 2010, which means each worker is being used less on average,” said Peter Boockvar, chief investment officer at Bleakley Financial Group, who nevertheless was as surprised as anybody by the headline print. “Bottom line, I wish I knew.”
January’s job report usually has an asterisk next to it due to seasonal layoffs, but the bureau's report is still surprising, particularly given other measures suggesting a cooling labor market. The slowdown was already predicted earlier in the week, when payroll company ADP reported that just 107,000 jobs were added to the private sector last month, a notable decrease compared with the 158,000 jobs added in December 2023.
Service-providing industries accounted for 77,000 of the total job gain, while medium-sized companies with 50 to 499 employees represented 61,000 of the jobs. In terms of regions, the South — which has seen the fewest job increases the last several months — managed to outpace other areas of the United States, gaining 57,000 of the total.
“Progress on inflation has brightened the economic picture despite a slowdown in hiring and pay,” ADP Chief Economist Nela Richardson said in a statement. “Wages adjusted for inflation have improved over the past six months, and the economy looks like it’s headed toward a soft landing in the U.S. and globally.”
ADP found that wages have increased 5.2% annualized since last year for those who remained in their current jobs, while those seeking greener pastures picked up 7.2% in additional wages during that same period.
Some say the ADP data should be concerning, even if it isn’t hugely startling, given that the Labor Department’s own jobs report has shown only 115,000 private jobs on average gained per month over the last three months.
“The ADP miss this morning is not entirely surprising,” Alex McGrathy, chief investment officer at NorthEnd Private Wealth, said on Wednesday after the report was released. “There have been whispers for months about real weakness in the job market that has been masked by inflated [BLS] numbers.”
Unemployment has also ticked up slightly, with 224,000 initial claims filed during the week ending Jan. 27, an increase of 9,000 from the previous week. Continuing claims, which are a week behind initial claims, also increased. During the week of Jan. 20, the Labor Department clocked nearly 1.9 million unemployed, a 70,000-claim increase from the prior week.
The jobs reports dovetail with other employment data released this week by the Bureau of Labor Statistics, such as the Employment Cost Index. The index, which measures labor compensation, increased by an adjusted 0.9% last quarter, the slowest it has risen since mid-2021. Wages also showed their lowest increase since the second quarter of 2021.
The agency’s JOLTS report, which measures quits and job opportunities, also showed more normalization of the previously hot jobs market, with quit rates down to pre-pandemic levels and job openings increasing very slightly.
Follow @NickRummell
Subscribe to Closing Arguments
Sign up for new weekly newsletter Closing Arguments to get the latest about ongoing trials, major litigation and hot cases and rulings in courthouses around the U.S. and the world.
Additional Reads
-
-
Dow hits key benchmark, as disinflation continues May 17, 2024
