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The Key Takeaways
- Employers in the United States added 143,000 positions in January. It was the slowest growth in employment since October. At the same time, unemployment fell to 4.1% from 4.1%.
- Federal Reserve officials will not be affected by the slowdown in the employment market. The Fed is under no pressure to increase the economy’s growth through lower borrowing rates.
- Job market is in a rut of low unemployment and relatively slow hiring.
In January, employers hired the least number of people since October while unemployment fell unexpectedly.
Bureau of Labor Statistics data released Friday shows that U.S. employers created 143,000 new jobs in January. This was less than the forecast of 169,000 jobs, which came from a Dow Jones Newswires/The Wall Street Journal survey of economics. In the meantime, unemployment fell from 4,1% to 4%, reaching its lowest rate since May. Median forecasts predicted that the unemployment rate would remain unchanged.
Recent trends on the labor market have intensified, according to data. Employers have been avoiding layoffs and hiring for months. Job growth has also slowed since 2022, when the demand for workers exploded after the pandemic. Although hiring has been slower, the job markets has held up and unemployment has not been high historically.
“Job gains were a little soft in January, but a big picture view on the U.S. labor market suggests it remains on very solid footing,” Ali Jaffery is an economist with CIBC capital markets. He wrote a comment.
Lindsay Rosner wrote in an article that one-off factors like the California wildfires, or a string of cold weather were likely to have slowed job growth.
Rosner writes that the Federal Reserve officials are unlikely to be compelled to reduce interest rates any time soon by the job slowdown. In an attempt to reduce inflation, which is still painful for households’ budgets, the Fed keeps rates unusually high and increases borrowing costs across all types of loans.
The financial markets expect the Fed to cut rates this year at some point if the inflation rate returns to the Fed’s target of a 2 percent annualized rate, or if the labor market begins showing signs of stress. Congress has given the Fed the task of keeping unemployment high and inflation low.
Correcting the Record
The report released on Friday also included several revisions. One affected data from this month, while another changed the record for historical purposes. Bureau finalized the revisions of the data for the period March 2023 to March 2024. The number of new jobs was revised downward by 589,000. The revisions were smaller than the initial version released in January of last year. That preliminary version reduced employment growth by 818,000.
The second revision added 2.9 millions people to the workforce, of which 2.1 million were in the work force as of January. These were previously unknown. This was because new Census data changed the estimate of the number immigrants that recently entered the country. According to the Bureau, as a result of this, both the employment rate and participation rate in the labor force were increased by 0.1 percentage points.
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