Source: AFP
U.S. job growth rose unexpectedly in December, government data showed on Friday, capping a solid year for the labor market even as voters remain gloomy about the economy ahead of November’s presidential election.
The world’s largest economy added 216,000 jobs in the final month of 2023 despite expectations for a slowdown from the previous month, Labor Department data showed.
The unemployment rate was unchanged at 3.7%, holding at a historically low level and defying forecasts for a slight increase.
These strong numbers come as higher interest rates bite after the Federal Reserve quickly raised its key lending rate and kept it high to dampen demand and rein in inflation.
They also add optimism that the United States is achieving a so-called soft landing where inflation declines without major job losses and a major recession.
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Wage growth was flat in December, up 0.4% from November 2023, according to the Labor Department.
Compared to the same period last year, average hourly earnings rose 4.1 percent, slightly above November’s reading.
Among the sectors where employment continued to grow were government, health care, social assistance and construction. But transportation and warehousing lost jobs.
In 2023, although sectors such as manufacturing and housing were hit hard by higher interest rates, a resilient labor market helped support consumption and the broader economy.
Still strong
Job growth in November 2023 was revised up to 173,000, according to the latest report, and Oxford Economics economist Ryan Sweet warned ahead of the release that “the jury is not going to be out on December employment for two more months”.
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“But overall, I think the trend is that the labor market is still very strong,” he told AFP.
Friday’s employment data is being watched closely for its potential impact on the Fed’s thinking as it looks at the future path of interest rates.
For now, “the timing of the first rate cut is still up in the air,” Sweet noted.
Analysts add that the Fed will not focus on just one report.
Beyond the hiring numbers, EY chief economist Gregory Dako said policymakers are looking for a “balanced labor market.” This means that labor demand and supply are well matched and upward pressures on wages are not excessive.
He noted that indicators such as working hours have shown a return to pre-pandemic levels, while both hiring and exit rates are “the lowest since 2014 and 2018, excluding the pandemic.”
“You’re seeing a leveling off, you’re seeing weaker labor demand,” he told AFP.
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Looking ahead, he expects some reduced hiring and “strategic layoffs, but not broad-based cuts in the labor market.”
“This should continue to sustain a healthy rate of income growth and then consumer spending,” he said.
Source: AFP