RALEIGH – The latest data on employment in the United States is out, and there’s a big surprise.
That’s as the U.S. economy added 517,000 payroll jobs in January 2023, according to the data released on Friday morning by the Labor Department.
Two economists based in the Triangle told WRAL TechWire earlier in the week that the expectations for payroll jobs would be a moderate figure, something between 100,000 and 200,000 jobs.
But a statement from the Bureau of Labor Statistics notes that “job growth was widespread.”
“This is a blockbuster report which surprised everyone,” said Dr. Mike Walden, an economist and a William Neal Reynolds Distinguished Professor Emeritus at North Carolina State University. “Jobs at businesses increased more than twice the consensus expectation, and the jobless rate plunged.”
Where job gains occurred
Such gains were led by increasing number of jobs in hospitality and leisure roles, but also in professional and business services and in healthcare.
Job gains were also made in the government sector, though the statement from the Labor Department notes that this may partially reflect the return of workers who were participating in a labor strike.
While more than a half million jobs were added to the economy, the unemployment rate was 3.4% in January. That unemployment rate “has shown little net movement since early 2022” according to the Labor Department’s statement.
And for January, the labor force participation rate remained unchanged, at 62.4%.
Also little changed was the number of people who are employed on a part-time basis due to economic reasons. That figure is 4.1 million people, who would otherwise prefer full-time employment but who are working part time due to an inability to find full-time work.
Federal Reserve likely to act – again
“This report goes against most other indicators suggesting a slowdown in economic activity,” said Walden. “In terms of what this means at the policy level, I think it suggests the Federal Reserve will not let up on the brake. More interest rate hikes are coming.”
That was the conclusion that Dr. Gerald Cohen, chief economist at the Kenan Institute, arrived at, as well.
“If they [the Federal Reserve] had to make a decision tomorrow, my expectation is that they would raise it [federal funds rate] by 50 [basis points],” said Cohen. “But they don’t have to make the decision tomorrow.”
Cohen noted in a public briefing on Friday morning that there are still concerns, including almost no movement in the labor force participation rate and the latest available data on wages showing an annual increase of 4.4%.
And Walden told WRAL TechWire that he’ll be watching for the state-level data, which will be released later in the month, to see whether the state followed the national pattern. Meanwhile, the latest WRAL TechWire Jobs Report showed that there are still tens of thousands of open jobs in the Triangle, despite the overall number of openings decreasing.