U.S. heads toward slow recovery with 353,000 jobs added in January
The number of jobs rose while unemployment held steady in January. (iStock)
Employment numbers for nonfarm payroll rose by 353,000 in January, the U.S. Bureau of Labor Statistics reported in its monthly Employment Situation Summary.
The unemployment rate remained unchanged from last month, holding at 3.7%. This is the third month in a row unemployment stayed steady. The number of unemployed people barely changed at 6.1 million, BLS data found.
"The U.S. economy added 353,000 jobs in January, almost twice the size of consensus expectation," Dawit Kebede, America's Credit Unions' senior economist, explained. "Average hourly earnings increased by 4.5% year-over-year, indicating positive real wage growth that will support consumer spending and economic growth."
Industries that saw the largest gains in jobs included business services, health care, retail and social assistance. The professional and business services industry added 74,000 jobs in January, a substantial increase from the average 14,000 jobs added in 2023.
Healthcare jobs also rose by 70,000, a healthy increase from the 58,000 per month added in 2023. Ambulatory services added the most jobs at 33,000 while hospitals added 20,000 jobs and nursing homes added 17,000.
A few industries did see a downward trend in jobs. This was mainly confined to the mining, oil and quarrying industries.
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Economy is rebounding faster than expected
Despite consistent fear there would be a recession in 2023, the U.S. economy beat these expectations again in the fourth quarter of the year. Real gross domestic product (GDP) increased by 3.3% in Q4 of 2023, the Bureau of Economic Analysis reported.
While that’s down from a GDP increase of 4.9% in Q3, it’s still on-track to keep the economy out of a recession.
"These trends [job growth] align with the Q4 GDP report, which showed more momentum in the economy at the end of the year and now into January," Mike Fratantoni, the Mortgage Bankers Association's SVP and chief economist, said. "However, they contradict the declining trend in job opening and hiring rates. And this news certainly runs contrary to the string of layoff announcements at many companies in recent weeks."
While certain industries were met with layoffs at the beginning of the year, this is largely a cost-cutting measure by major companies rather than an indication that job growth is slowing.
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Inflation slows, but prices remain high
On top of job growth, inflation has slowed significantly. The Fed is still holding off on cutting interest rates, but there’s still an expectation that multiple rate cuts are coming.
"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," Realtor.com Chief Economist Danielle Hale explained.
While inflation has dropped, prices for just about everything remain high. Overall, prices are about 17% higher than they were before the pandemic, AP News reported.
Major markets like the rental market and the real estate market have also yet to cool. Home prices in the U.S. averaged over $400,000 and rose by 3.7% in December 2023, a Redfin study stated.
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