WASHINGTON–Hiring surged in January with 517,000 jobs being created, according to new data from the Labor department. As a result, unemployment fell to 3.4%, the lowest rate in more than 53 years.
Average hourly earnings also increased 4.4% in January from a year earlier, down from a revised 4.8% in December, according to the Labor Department, which said the payroll gains during the year’s first month were the largest since July 2022, bringing to an end a string of five straight months of slowing employment growth.
Curt Long
"The January jobs report surprised to the upside in a major way. Even acknowledging the typical volatility in January reports, the labor market is too hot to allow a recession for the time being,” said NAFCU Chief Economist and VP-Research Curt Long. “The reemergence of inflation is a bigger worry, and this report makes an imminent pause in rate hikes less likely. Last year taught us that inflation is a local phenomenon, with some areas more affected than others by price surges in houses or autos. Because credit unions are deeply embedded in their communities, they are best positioned to support the particular challenges in the areas they serve."
The Labor Department data show payrolls grew in a broad range of employment categories, including leisure and hospitality, professional and business services and healthcare. Government employment also increased as some workers returned from a strike. The average workweek rose to 34.7 hours, the highest since March 2022, the Labor Department said.
CUNA: 'Not Good News for Fed'
“This is a much larger increase than consensus projections. As consumer spending and investment activity slows down in the backdrop of tight monetary policy, the expectation is that employers will add fewer jobs creating some slack in the labor market," stated CUNA Senior Economist Dawit Kebede. "The trend in the last quarter of 2022 seemed to go in that direction - with an average of 250,000 jobs a month, a slower pace than previous quarters.
“The increase in wages slowed down, indicating employers are able to find workers despite the imbalance in labor demand and supply. The average hourly earnings increased by 0.3%, to an annualized rate of 3.6%. This is close to a long-run trend in wage growth.
“The strong employment gain is not good news for the Federal Reserve fighting to bring inflation down to a 2% target. The projections by members of the Federal Open Market Committee show that an increase in the unemployment rate is part of calculus to bring price increases down.”
Well Above Forecast
The 517,000 jobs added is significantly above the 187,000 figure that had been predicted by economists surveyed by the Wall Street Journal.
As CUToday.info has reported, economists continue to forecast a mild recession for the second half of 2023
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