Job Market Starts 2024 With a Bang

U.S. employers added 353,000 jobs in January, far exceeding forecasts, and revised figures showed last year was even stronger than previously reported.

The United States produced an unexpectedly sizable batch of jobs last month, a boon for American workers that shows the labor market retains remarkable strength after three years of expansion.

Employers added 353,000 jobs in January on a seasonally adjusted basis, the Labor Department reported on Friday, and the unemployment rate remained at 3.7 percent.

The report also put an even shinier gloss on job growth for 2023, including revisions that added more than 100,000 to the figure previously tallied for December. All told, employers added 3.1 million jobs last year, more than the 2.7 million initially reported.

After the loss of 14 percent of the nation’s jobs early in the Covid-19 pandemic, the labor market’s endurance despite aggressive interest rate increases has caught economists off guard.

“I think everyone is surprised at the strength,” said Sara Rutledge, an independent economics consultant. “It’s almost like a ‘pinch me’ scenario.”

Ms. Rutledge helped tabulate the National Association for Business Economics’ latest member survey, which found rising optimism that the country would avoid a recession — matching a turnaround in measures of consumer sentiment as inflation has eased.

January’s crop of added jobs, nearly twice what forecasters had expected, mirrors the similarly surprising strength in gross domestic product measurements for the fourth quarter of 2023. It is also likely to reinforce the Federal Reserve’s patient approach on interest rates, given the risk that increased wages might push prices up faster.

Jerome H. Powell, the Fed chair, signaled this week that rate cuts would not begin until at least May, citing a desire to see more evidence that inflation is falling back to its target.

The latest job data prompted a victory lap from Biden administration officials, who highlighted an unemployment rate only a few ticks above a 70-year low.

“The fact that that’s been below 4 percent for two years running now is just a very clear and reliable signal that this is not just a tight labor market, but a reliably and persistently tight labor market,” said Jared Bernstein, chair of the White House Council of Economic Advisers.

January’s gains were also broader than has been the case in other recent reports: Professional and business services accelerated to pile on 74,000 jobs, while health care added 70,000. The only major sector to cut workers was mining and logging.

Average hourly earnings also grew swiftly, at 0.6 percent from December.

Still, analysts cautioned against reading too much into the month’s overall gain, given recent volatility in initial survey estimates. Last January, for example, was much stronger than the full-year average. And the latest report contains a few oddities, as well.

The survey window was interrupted by bone-chilling cold and snowstorms, possibly shortening the workweek and raising hourly wages. Also, the addition of so many relatively well-paid white-collar workers may have pulled up the average. Hotels and restaurants, where pay is lower, shed a few thousand jobs.

Agron Nicaj, a U.S. economist at the banking and financial services firm MUFG, noted that job postings had been elevated in professional and business services for the past few months. That may mean January’s surge will be short-lived, especially given the latest report from outplacement firm Challenger, Gray & Christmas that found layoff announcements surged last month after a quiet quarter.

“I wouldn’t expect a reacceleration because of the relationship with the industries that grew this month and the openings,” Mr. Nicaj said. “I think this month reflects a refilling of jobs that they couldn’t fill.”

And yet it’s clear that the new year dawned on what has been an exceptionally good economy for many workers. Wages have been growing faster than their historical rates, and a strong increase in productivity over the last three quarters has helped keep those fatter paychecks from fueling higher prices. The number of open jobs still exceeds the stock of people looking for positions, even as new immigrants and women have joined or rejoined the work force in unexpected numbers.

That trend may continue if higher wages keep bringing people off the sidelines. The number of people not in the labor force who want a job has surged in recent months, to 5.8 million, suggesting that they could jump back in if pay outweighed the cost of child care or a long commute.

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