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Economic News

US Job Market Delivers Another Big Upside Surprise

February 2, 2024
Francis Généreux
Principal Economist

Highlights

  • According to the Establishment Survey, the US added 353,000 jobs in January.
  • Revised data were also released today. Job gains for 2023 were upwardly revised by +359,000, from 2,697,000 to 3,056,000.
  • Unemployment held steady at 3.7% in January.

Comments

Once again, the job market surprised us all with its strength. It added 353,000 jobs in January, almost twice as many as the consensus forecast of 180,000.

In addition, data for 2023 was revised upward to show a gain of +359,000, although 2022 and 2021 data was revised downward by -265,000 and -22,000, respectively. Total nonfarm employment at the end of 2023 was revised upward by 115,000, in addition to the increase in January. This resulted in a much rosier picture than expected.

If we take a closer look at January's results, we see that the gains are broad-based. In January, 65.6% of the 250 sectors surveyed reported expanded payrolls, compared to 64.0% in December and only 52.4% in November. Most of the increase was in private services, which posted its biggest advance in a year (289,000). That included 45,200 net hires in retail trade and a solid gain of 112,000 jobs in private education and health services. One of the few soft spots was accommodation and food services, which lost 5,500 jobs, possibly due to the chilly weather that hit a number of regions in January. Interestingly, temporary help services recorded an uptick (+3,900) for the first time since March 2022.

As far as wages are concerned, the pressure is still on. The average hourly wage rose 0.6% month-on-month in January, the most in nearly 2 years. The year-over-year change climbed to 4.5%, back to where it was in September. That said, this increase may have been somewhat exaggerated by the decline in hours worked in some lower-wage industries. Although US labour productivity is high, the strength of the job market makes it hard to slow wage growth to a rate that's consistent with the 2% inflation target.

Implications

The US job market remains surprisingly robust. This will make it hard for the Fed to be confident that inflationary pressures have eased enough to cut rates anytime soon. If employment and wage growth stay resilient, it will take another few meetings before we can hope to see the Fed start loosening US monetary policy.

NOTE TO READERS: The letters k, M and B are used in texts, graphs and tables to refer to thousands, millions and billions respectively. IMPORTANT: This document is based on public information and may under no circumstances be used or construed as a commitment by Desjardins Group. While the information provided has been determined on the basis of data obtained from sources that are deemed to be reliable, Desjardins Group in no way warrants that the information is accurate or complete. The document is provided solely for information purposes and does not constitute an offer or solicitation for purchase or sale. Desjardins Group takes no responsibility for the consequences of any decision whatsoever made on the basis of the data contained herein and does not hereby undertake to provide any advice, notably in the area of investment services. Data on prices and margins is provided for information purposes and may be modified at any time based on such factors as market conditions. The past performances and projections expressed herein are no guarantee of future performance. Unless otherwise indicated, the opinions and forecasts contained herein are those of the document’s authors and do not represent the opinions of any other person or the official position of Desjardins Group.