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Tuesday, March 21, 2023

U.S. Reports Blowout Job Surge as Unemployment Rate Hits a 53-year Low

Payrolls in the construction industry surged by 25,000 jobs

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Sadaf Hasan
Sadaf Hasan
Aspiring reporter covering trending topics

UNITED STATES: The unemployment rate in the United States fell to a more than 53-1/2-year low of 3.4% in January, indicating a consistently strong labour market and posing a potential challenge for Federal Reserve officials attempting to combat inflation.

Friday’s carefully watched employment report from the Labor Department also revealed that job growth over the previous year had been significantly stronger than anticipated, indicating that the economy was far from entering a recession.

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Even though wage inflation slowed down even more in January, average hourly wages grew faster than expected in 2022.

The robust hiring, which took place despite layoffs in the technology industry as well as in interest rate-sensitive industries like housing and finance, dashed market hopes that the U.S. central bank was about to pause its cycle of tightening monetary policy.

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Economists thought that the Fed might raise its target interest rate above the recently expected peak of 5.1% and keep it there for a while because of the strange report and other data released on Friday that showed a strong comeback in the services industry last month.

Daniel Vernazza, the chief international economist at UniCredit Bank in London, stated that the labour market is still running hot—too hot for the Fed’s linking. “Anyone who expected the Fed to stop hiking as soon as its March meeting is likely to be disappointed,” Vernazza said.

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The poll of businesses revealed that nonfarm payrolls increased by 517,000 positions in the past month, the largest increase in the previous six months. 

A gain of 185,000 was what economists predicted in a recent survey. The previously reported 223,000 jobs added in December were increased to 260,000 as a result of data revisions. 

The number of jobs added last month was much higher than the monthly average of 401,000 jobs added in 2022.

With the January report, the Bureau of Labor Statistics (BLS), which is part of the Labor Department, changed the algorithms it used to smooth the data for normal seasonal changes in the establishment survey. It also released its annual “benchmark” modification for payroll.

The economy gained 568,000 more jobs than previously estimated in the 12 months ending in March 2022. Payroll figures for the period of April through December were revised, and these results revealed a higher number of jobs generated than anticipated. 

Instead of the 4.5 million previously estimated, the economy added 4.8 million jobs in 2022.

Researchers from the Philadelphia Fed wrote a report in December saying that the growth in jobs in the second quarter of 2022 was overstated by almost a million jobs. The updates showed that this was not true. About 10% of employment was reclassified into different industries as a result of BLS revisions to its industry classification methodology. 

Last month, 128,000 jobs were created in the leisure and hospitality sector. Of those, 99,000 were in restaurants and bars, which drove the overall growth in jobs.

495,000 fewer jobs are employed in leisure and hospitality than there were before the outbreak. Employment in professional and commercial services increased by 82,000, with temporary help jobs—a sign of future hiring—bouncing back by 25,900 after dropping for many months. Due to the return of California’s striking university employees, government payrolls increased by 74,000.

Payrolls in the construction industry surged by 25,000 jobs, largely at speciality trade contractors. 19,000 more jobs were added to manufacturing.

Wall Street stocks were primarily trading lower. Compared to a basket of currencies, the dollar rose and treasury prices dropped.

Joe Biden, the president, claimed that the employment data was evidence that his economic strategy was effective. On Twitter, the Democratic president wrote that “jobs are going up, inflation is going down.”

Also Read: Spain’s Unemployment Rate Spikes up to 12.67% in Q3 Amid High Inflation


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