The Commercial Appeal

Report: January brings surprise burst of hiring

Broad-based job gains have economists baffled

- Paul Wiseman

WASHINGTON – For nearly a year, the Federal Reserve has been on a mission to cool down the job market to help curb the nation’s worst inflation bout in four decades.

The job market hasn’t been cooperatin­g.

Consider what happened in January: The government said Friday that employers added a sizzling 517,000 jobs last month and that the unemployme­nt rate dipped to 3.4%, the lowest level since 1969. The job gain was so large it left economists scratching their heads and wondering why the Fed’s aggressive interest rate hikes haven’t slowed hiring at a time when many foresee a recession nearing.

Friday’s report instead added to the picture of a resilient U.S. labor market, with low unemployme­nt, relatively few layoffs and many job openings. Though good for workers, employers’ steady demand for labor has also helped accelerate wage growth and contribute­d to high inflation.

But the Fed’s inflation watchers might be reassured somewhat by January’s wage data: Average hourly pay rose 4.4% last month from a year earlier, slower than the 4.8% year-over-year increase in December. And from December to January, wages rose 0.3%, below the 0.4% increase the previous month.

On top of the sizzling job growth it reported for January, the government on Friday also revised up its estimate of the gains in November and December by a combined 71,000.

January’s hiring was broad-based across industries. A category that includes restaurant­s and bars added 99,000 workers. Profession­al and business services jobs, including bookkeeper­s and consultant­s, rose by 82,000.

Government­s added 74,000, boosted by the end of a worker strike against California’s state university system. Health care added 58,000 jobs, retailers 30,000. Constructi­on gained 25,000 jobs. Manufactur­ing added 19,000.

Economists had collective­ly estimated that the economy added just 185,000 jobs last month.

“This is a labor market on heat,” said Seema Shah, chief global strategist at Principal Asset Management. It would be difficult, she suggested, “to see the Fed stop raising rates and entertain ideas of rate cuts when there is such explosive economic news coming in.”

January’s job growth far exceeded December’s 260,000 total and extended

a streak of substantia­l gains. In part out of concern that those job gains would keep inflation high, the Fed has raised its key rate eight times since March to try to contain inflation, which hit a 40-year high last year but has slowed since then.

Companies are still seeking more workers and are hanging tightly on to the ones they have. Putting aside some high-profile layoffs at big tech companies like Microsoft, Google, Amazon and others, most workers are enjoying an unusual level of job security even at a time when many economists foresee a recession approachin­g.

For all of 2022, the economy had added a sizzling average of roughly 375,000 jobs a month. That was a pace vigorous enough to have contribute­d to the painful inflation Americans have endured. A tight job market tends to put upward pressure on wages, which, in turn, feed into inflation.

 ?? ANGELA PIAZZA/CORPUS CHRISTI CALLER-TIMES ?? January’s unexpected job gains were spread widely across industries. The constructi­on industry gained 25,000 jobs.
ANGELA PIAZZA/CORPUS CHRISTI CALLER-TIMES January’s unexpected job gains were spread widely across industries. The constructi­on industry gained 25,000 jobs.

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