The US economy defied expectations and stormed out of the gates in 2024, adding a whopping 353,000 jobs in January. This marks the highest monthly job gain since February 2020, sending shockwaves through analysts and sparking optimism for the year ahead.
CNN in New York — According to Bureau of Labor Statistics data released on Friday, the US economy added an astounding 353,000 jobs last month. This was a stronger-than-expected growth to start 2024 and demonstrated the US economy’s resiliency in an election year.
The previous month’s 3.7% unemployment rate persisted. For a record 24 months running, the unemployment rate in the country has remained below 4%.
Joe Brusuelas, chief economist and principal at RSM US, told CNN that “the fact that the unemployment rate has been below 4% for 24 months straight for the first time since 1967 is truly remarkable.” “And as I read this report, I can’t stop saying, ‘This is remarkable.'” Here, “remarkable” is the key word.
Over a year ago, it was almost a given that the labor market would be affected by the Federal Reserve’s aggressive rate-hiking campaign, and might even be in shock. However, after eleven increases and four pauses, the US labor market is experiencing one of its longest expansions this century.
The market was shocked by January’s employment growth, which reduced expectations that the Fed will drop rates as often as six times in 2024 and that it would do so sooner rather than later—possibly as early as March. The CME FedWatch Tool shows that investors’ chance of a March rate cut fell from 38% to less than 20% on Friday.
Still, the better-than-expected result ought to improve Americans’ middling feelings regarding the economy. And it shouldn’t derail the Fed from its current course because, according to Brusuelas, officials have hinted at three rate cuts this year.
“From now on, the Fed will need to exercise extreme caution in managing expectations,” he stated. Powell stated that “it’s just a matter of not if, but when” the central bank will make cuts.
An upside surprise
From December, when job growth was far higher than anticipated, hiring picked up speed. The revised December job growth of 333,000 was made up of 117,000 additional posts. Although only by 9,000 jobs, November’s revision resulted in an 182,000 net job gain.
The advances in January completely exceeded the forecasts of economists: According to FactSet, consensus estimates had predicted a net gain of 176,500 jobs last month.
However, analysts have warned that January is one of the most difficult months to predict because it’s usually a busy month for job losses due to seasonal employees being let go after the holidays and other firms tightening their belts in preparation for the new year. New seasonal adjustment factors are also applied by the BLS at the beginning of the year.
For these reasons, some economists suggested to CNN this week that January would surprise positively.
They were given one.
Where the job growth occurred
According to BLS data, most major industries had job growth in January, with the exception of mining and logging.
Eleven thousand more jobs were created by private health and education services. Of those, 100,400 were related to health and social assistance, followed by business and professional services at 74,000 and retail commerce at 45,200.
According to BLS data, the leisure and hospitality sector created just 11,000 jobs in January, but it was still the 36th consecutive month of job growth. Just 0.4% (75,000 jobs) separated this vital service sector—which was severely damaged at the start of the pandemic—from returning to its pre-pandemic employment levels as of January 2020.
Leisure, hospitality, and other service industries have profited from Americans’ strong willingness to spend money on experiences throughout the pandemic’s recovery.
150+ applicants for 30 jobs
Jillian Hiscock found the more than twenty-six employees she needed for her new sports bar in Minneapolis with relative ease.
About a month from now, Hiscock will launch A pub of Their Own, a restaurant and pub that will only broadcast events pertaining to women’s sports. Since Hiscock presented the idea last spring and launched a crowdfunding effort to get it off the ground, the Twin Cities community has overwhelmingly supported the idea, which was inspired by industry forerunner The Sports Bra in Portland, Oregon.
The same was true for A Bar of Their Own’s employment efforts: in just two days, she received 150 applications for 25–30 available positions.
“Given our timeline, I just wanted to make sure we were being realistic about who we could actually communicate with,” she said. “It’s a good problem to have.” “Yeah, but we had to close it down in less than two days with over five times the number of applications as we needed for the open positions.”
The candidates ranged widely in terms of experience; some had worked in restaurants, while others were unemployed or seeking to change careers.
“We’ve had a lot of folks whose relationships with work have fundamentally changed since things have opened up [after the pandemic],” she said. Because we all know how easily something can be taken away, “showing up and just doing a thing for somebody that you feel doesn’t care about as a human is less interesting to people now.”
She stated that people’s desires for a better work-life balance are still present.
People were very enthusiastic about this and saw it as more than just a new job.
A banner year
The results of the BLS’s annual benchmark review of payroll data were also included in the jobs report released in January. Although the US job growth last year was 266,000 fewer than initially predicted, it was still not as bad as the preliminary benchmark forecasts had indicated.
Despite those changes, 2023 was a record-breaking year for job expansion. Seasonally adjusted data show that there were about 3.06 million new employment created last year. According to BLS data, that’s the greatest yearly jobs total since 1999 and the 17th largest on records dating back to 1939, excluding the record-breaking 2021 and 2022.
Pay increases, which increased by 4.5% annually and 0.6% for the month, were another unexpected development.
Brian Coulton, chief economist at Fitch Ratings, stated in a note released on Friday that “this elevates the risk that nominal wage growth will not fall back to levels consistent with reaching the inflation target on a sustained basis, particularly as the labor force participation rate refuses to rise any further.” “The Fed has a problem with wages growing at this rate in this tight labor market.”
Burying the recession expectations
The robust economic growth and spikes in consumer spending that the United States has witnessed in recent months have been made possible by a solid job market. Furthermore, although companies have curtailed hiring, employee turnover has decreased, and salary increases have moderated, people’s paychecks are now more disposable income than they have been in years due to the slowdown of inflation.
Even still, sentiments among Americans have been improving, despite the country’s robust economy. 35% of Americans, according to a recent CNN poll issued on Friday, believe that things are going well in their nation. Compared to last fall, when 28% of people had good feelings about the situation, this is an improvement.
The survey revealed that the opinion is strongly.
According to Brusuelas, the predicted 4.5% annual hourly wages rise that was revealed on Friday will ultimately be beneficial for the American mentality even though it might give the Fed a problem.
He declared, “This ought to put the last of the recession calls six feet under.” It’s all about jobs and earnings, and this data shows how productivity has increased. Increased productivity results in more jobs, higher salaries, and higher living standards. That fabled tide is what raises all boats.