Job growth was unexpectedly strong in January, with companies adding workers at the robust pace of 353,000 last month, another data report pointing to the strength of the U.S. economy.
The latest data, issued Friday by the U.S Bureau of Labor Statistics landed well above the 255,000 monthly average for 2023, which was higher due to upward revisions in November and December figures. Despite the strong job gains, unemployment held steady at 3.7%, according to the report. Job gains were widespread, in professional and business services, health care, retail trade and social assistance. Employment declined in the mining, quarrying, and oil and gas extraction industry.
Here’s a look at some of the latest numbers:
- Total nonfarm payroll employment rose by 353,000 in January, similar to the gain of 333,000 in December. Payroll employment increased by an average of 255,000 per month in 2023. In January, job gains occurred in professional and business services, health care, retail trade, and social assistance. Employment declined in the mining, quarrying, and oil and gas extraction industry.
- Professional and business services added 74,000 jobs in January, considerably higher than the average monthly increase of 14,000 jobs in 2023. Over the month, professional, scientific, and technical services added 42,000 jobs. Employment in temporary help services changed little over the month (+4,000) but is down by 408,000 since reaching a peak in March 2022. In January, employment in health care rose by 70,000, with gains in ambulatory health care services (+33,000), hospitals (+20,000), and nursing and residential care facilities (+17,000). Job growth in health care averaged 58,000 per month in 2023.
- Retail trade employment increased by 45,000 in January but has shown little net growth since early 2023. Over the month, general merchandise retailers added 24,000 jobs, while electronics and appliance retailers lost 3,000 jobs.
- Employment in social assistance rose by 30,000 in January, reflecting continued growth in individual and family services (+22,000). Employment in social assistance grew by an average of 23,000 per month in 2023.
- Employment in manufacturing edged up in January (+23,000), with job gains in chemical manufacturing (+7,000) and printing and related support activities (+5,000). Manufacturing experienced little net job growth in 2023.
What the experts are saying:
“This morning’s Employment Situation report showed that the U.S. economy added an amazing 353,000 jobs in January, well beyond most analysts’ expectations,” said Bright MLS Chief Economist Dr. Lisa Sturtevant. “On average, monthly job growth was 255,000 throughout 2023, so the early 2024 number is remarkable. The unemployment rate in January remained at 3.7%, marking two straight years of sub-4% unemployment rates, which is the longest streak since the 1960s.
“The positive employment report all but guarantees that the Fed will not cut interest rates at the March meeting. A rate cut in May is still likely.
“Mortgage rates have been fluctuating between 6.6% and 6.7% this year, according to data from Freddie Mac. Mortgage rates will likely bump around that level for the first part of the year and will decline further in the second half of the year.
“Strong consumer demand and pandemic-induced savings have fueled both strong employment and the robust housing market, even with higher rates. Consumers are now saving less but, so far, continue to spend. While job growth in January seems to suggest the economy will continue to grow quickly, the picture could begin to shift as more people have to rethink their spending habits.
“Home prices continue to rise, and affordability is a top concern for prospective homebuyers. Demand for homeownership remains strong, but buyers will increasingly be making tradeoffs in both the types and locations of homes to make the numbers work.
“Wages continue to rise, with the average hourly wage up 4.5% over the past 12 months, which is a positive for workers but also means inflation will be hard to get down to the Fed’s 2% target. Overall, 2024 will be a year of a normalizing economy and housing market but the path to that more normal situation is still unclear,” Sturtevant concluded.
“At January’s Fed meeting, no rate change was announced, as the Fed is still looking for additional confidence that inflation is on a path to its 2% target, which would be consistent with its price stability mandate,” said Realtor.com Chief Economist Danielle Hale. ”The fact that the labor market has weathered higher rates well thus far has given the Fed leeway to focus on the price stability side of the dual mandate without having to neglect the also important full employment aim. Based on current data and projections, Chair Powell noted in his press conference that a March Fed Funds rate cut did not seem likely, but left margin to react to incoming data. Today’s employment figure, however, likely tilts the balance further toward no rate cut in March.
“Other signs of normalization in labor markets continue. In December, job openings eked a small gain to 9.0 million from 8.9 million in November, keeping the rate steady at 5.4%. Job quits shrank from 3.5 to 3.4 million while the rate steadied at 2.2%, levels and rates that are at the upper range of pre-pandemic readings.
“Average hourly earnings for private employees are expected to continue to grow by 4.5%. With inflation running at 3.4% in December and likely near that level in January, this means that workers have seen real growth in their spending power over the last year. Unfortunately, the cost of buying a home has still outpaced wage growth, rising 5.4% in January. On the bright side, however, this growth is slower than in December and November, when costs were up 6.1% and 7.9%, respectively, and weekly data show that home price gains got smaller throughout the course of January and mortgage rates dipped,” Hale concluded.
To view the full report, click here.
