By Beiyi SEOW
WASHINGTON, Feb 2, 2024 (AFP) – The US labor market smashed expectations last month in a surprise hiring pick-up, government data showed Friday, with a resilient jobs market likely good news for President Joe Biden in election year.
The world’s biggest economy added 353,000 jobs in January, after December’s figure was significantly revised upwards to 333,000, said the Department of Labor.
The unemployment rate held steady at 3.7 percent for a third straight month.
This will likely be positive for Biden, who is struggling to shore up voter sentiment on his handling of the economy as he campaigns for a second term in the White House.
Over the past year, a solid jobs market has helped to support consumer spending and in turn economic growth even as borrowing costs rose. The strong start this year signals that the labor market is set to continue bolstering the economy.
But the picture may be more complicated for the Federal Reserve, which has been working to lower stubborn inflation by lifting interest rates to ease demand.
Even though Fed Chair Jerome Powell told reporters this week that strong growth and a robust jobs market is not necessarily a problem for policymakers, persistently hot labor conditions muddle their battle against inflation.
– ‘Good shape’ –
In particular, January wage gains also rose more than anticipated at 0.6 percent from the prior month.
From a year ago, average hourly earnings jumped 4.5 percent.
Professional and business services were among sectors seeing job gains, alongside health care and retail trade, said the Labor Department.
But it added that employment fell in areas like mining, as well as the oil and gas extraction industry.
Broadly “the labor market’s still in really good shape,” said Ryan Sweet of Oxford Economics.
He added that the demand and supply of labor has continued to “normalize” without much pain for the broader economy.
The Fed “can’t declare victory yet, but it seems like they are still on the path towards softish type landing,” he told AFP.
For now, despite the strong figures, existing efforts to cool the economy could still be rippling through sectors.
Dan North, senior economist at Allianz Trade North America warned that the full effect of interest rate hikes takes “three to six quarters” to kick in.
With the most recent Fed rate hike in July last year, this period has not been reached.
“I think that there’s still ammunition that’s already been shot at inflation in the economy that hasn’t quite gotten there yet,” he told AFP.