Daily Management Review

Strong Job Growth In The US Muffles Discussion Of Rate Reduction


Strong Job Growth In The US Muffles Discussion Of Rate Reduction
US hiring was surprisingly robust last month, despite predictions that the economy would slow down. The Labour Department said that employers added 216,000 new jobs while the unemployment rate remained at 3.7%.
The gains, which continued one of the best job growth streaks ever recorded, were driven by government hiring. Forecasters who anticipated employment losses have been confused by the rise as the economy has slowed due to higher borrowing prices.
However, it has stoked optimism that the US Federal Reserve will be able to control inflation—the pace at which prices increase—without precipitating a severe recession.
In all, the US added 2.7 million jobs last year—a slower rate than in the years before the pandemic—but still more quickly than in the 4.8 million and 6.4 million employment booms of 2022 and 2021. Pay appeared to be improving, with average hourly earnings in December increasing 4.1% over the previous year.
The report's positive indicators, according to analysts, should allay concerns that the Federal Reserve will soon have to change course and begin lowering interest rates in order to protect the economy.
"Jobs growth remains as resilient as ever, validating growing scepticism that the economy will be ready for policy rate cuts as early as March," Seema Shah, chief global strategist at Principal Asset Management, said.
"Indeed, the recent run of labour market data generally point in one direction: strength."
A line graph illustrating the US job market's monthly growth. The US economy added 216,000 jobs in December 2023. In a statement, President Joe Biden praised the results and mentioned falling price inflation. Biden has had difficulty persuading people that a slowing economy can be robust.
According to the most recent data, consumer prices increased 3.1% in November over the same month last year.
"This morning's report confirms that 2023 was a great year for American workers," he said, adding: "I won't stop fighting for American workers and American families. I know that some prices are still too high for too many Americans."
Certain observers cautioned that signs of deterioration in the private sector suggested potential issues.
Retail, finance, and leisure and hospitality—which includes bars, restaurants, and the arts—saw very modest increase and have not yet recovered to pre-pandemic employment levels.
The labour department also reported that job growth in November and October was lower than originally predicted. During the pandemic, the number of jobs in transportation and warehousing increased, but these jobs have since declined.
"The impact of the new revisions published today is that the trend in private payroll growth continues to slow relentlessly," Ian Shepherdson of Pantheon Macroeconomics said.