US employers added 517,000 jobs in January

NEW YORK – The United States labour market affirmed its strength in January, producing another hefty round of hiring even as interest rates continue to rise.

Employers added 517,000 jobs on a seasonally adjusted basis, the Labour Department said on Friday, an increase from 260,000 in December.

The unemployment rate was 3.4 per cent, the lowest since 1969.

Average hourly earnings rose 0.3 per cent after gaining 0.4 per cent in December. That lowered the year-on-year increase in wages to 4.4 per cent from 4.8 per cent in December.

The robust hiring figures defied expectations and underscored the challenges facing the Federal Reserve, which is trying to cool the labour market in its effort to tame rapid inflation. By raising interest rates – on Wednesday,

Fed officials did so for the eighth time in a year

– policymakers hope to force businesses to pull back on their spending, including hiring.

Fed chair Jerome Powell told reporters on Wednesday that “the economy can return to 2 per cent inflation without a really significant downturn or a really big increase in unemployment”. With wages moderating and inflation trending lower, economists are increasingly agreeing with that sentiment.

The labour market has remained extraordinarily tight.

In addition to the report on Friday, the government released data this week showing that the number of posted jobs per available unemployed worker – a measure that policymakers have been watching closely – rose again in December. And despite

a cavalcade of layoffs

in the technology sector, the overall number of pink slips has stayed extremely low.

“The labour market is still incredibly hot,” said chief US economist at S&P Global Ratings Beth Ann Bovino.

Still, some measures suggest that higher interest rates appear to be slowing other parts of the economy. Transactions in the housing market, which is particularly sensitive to rate increases, have plummeted as high mortgage rates make purchases too expensive for many would-be home owners.

Consumer spending fell at the end of 2022, a sign that Americans were becoming more cautious in the face of rising prices, dwindling savings and fears of recession.

Many forecasters expect the labour market to also slow in 2023 as the Fed’s rate moves filter through the economy.

NYTIMES