The January Jobs Report dropped Friday morning with surprisingly strong numbers. 517,000 jobs were added in January, a sharp increase from the 260,000 added in December (revised up from the original 223,000 reported). The unemployment rate dropped to 3.4 percent.
As the AP notes, the number caught economists by surprise:
Consider what happened in January: The government said Friday that employers added a sizzling 517,000 jobs last month and that the unemployment rate dipped to 3.4%, the lowest level since 1969.
The job gain was so large it left economists scratching their heads and wondering why the Fed’s aggressive interest rate hikes haven’t slowed hiring at a time when many foresee a recession nearing.
I’m no economist and won’t pretend to be one, but it seems to me that the traditional variables and metrics have been upended in recent years, so maybe the traditional forecast models no longer apply?
While layoffs at top tech companies have grabbed headlines of late, the gains reported Friday were across numerous sectors.
January’s hiring gain, which far exceeded December’s 260,000, was broad-based across industries. A category that includes restaurants and bars added 99,000 workers. Professional and business services jobs, including bookkeepers and consultants, rose by 82,000.
Governments added 74,000, boosted by the end of a worker strike against California’s state university system. Health care added 58,000 jobs, retailers 30,000. Construction gained 25,000 jobs. Manufacturing added 19,000.
Economists had collectively estimated that the economy added just 185,000 jobs last month.
The downside to the good news? It’s unlikely the numbers will encourage the Fed to pull back on interest rates.
“This is a labor market on heat,” said Seema Shah, chief global strategist at Principal Asset Management. It would be difficult, she suggested, “to see the Fed stop raising rates and entertain ideas of rate cuts when there is such explosive economic news coming in.”
President Biden, for his part (or, rather, whoever runs his social media), was quick to crow about the remarkable numbers, taking to Twitter to declare:
I don’t know if that was a failed attempt at iambic pentameter, or if someone’s hoping to set it to music, but as I noted, it doesn’t appear that one of the jobs created was a copy editor for his tweets.
(Clearly, I’ve not hired one for mine, either — #DefineIrony. Hey, Elon — where’s that Edit button?!)