This Friday at 8.30 AM ET the Bureau of Labor Statistics released the employment report of January 2023. It showed that the total nonfarm payroll employment increased by 517,000 in January and the unemployment rate decreased to 3.4% to a 53 year low. As per the January report the average hourly earnings increased by 10 cents or 0.3% month on month to $33.03 and over the past 12 months it increased by 4.4%. The last time this level of unemployment rate recorded was on May 1969. This report showed that the US economy and mainly labor market is still very strong and robust despite the extreme monetary tightening by the US Federal Reserve. This comes as a surprise to all economists estimate of a cooling labor market followed by the recent layoffs in the tech sector. Although this is good for the economy and lives of people, but this can also put pressure on the prices of goods and services as higher employment level is likely to boost consumer spending hence boosting inflationary pressures while the central bank is trying to fight and tame inflation.

As per the BLS, the leaders in adding employment this month were Leisure and Hospitality followed by Professional and Business Services. Leisure and Hospitality sector added 128,000 jobs last month while the average monthly jobs in this sector increased by 89,000 per month in 2022. This could be because of the peak holiday season and New Year travel in the US and around the world. Similarly, Professional and Business Services employment increased by 82,000 jobs on January and the average monthly jobs in this sector increased by 63,000 per month in 2022.

The Government employment rose by 74,000 jobs in January which was attributed to the return of university employees who are in the strike. Health care sector employment increased by 58,000 jobs in January while the average jobs increase per month of this sector in 2022 was 47,000 jobs per month. The employment in the retail trade rose by 30,000 jobs, in the construction by 25,000 jobs, in the transportation and warehousing by 23,000 jobs, in the social assistance by 21,000 jobs and in the manufacturing by 19,000 jobs.

The report also mentioned that the change in total nonfarm payroll employment for November was revised up by 34,000 jobs from 256,000 jobs to 290,000 jobs and the change for December was revised up by 37,000 jobs from 223,000 jobs to 260,000 jobs. The revised employment gains in November and December altogether were 71,000 jobs higher than that was previously reported  and this occurs due to the additional reports received from different businesses and government agencies as per the BLS.

BLS reported that the number of unemployed persons remained a little changed in January to 5.7 million while the number of persons jobless less than 5 weeks decreased to 1.9 million. The number of long-term unemployed persons which the BLS categorizes as those who are jobless for 27 weeks or more was almost unchanged at 1.1 million.  Regarding Underemployment data, The number of persons employed part time for economic purpose was 4.1 million and this was little changed in January. These are the employees who wanted to have a full time employment but were working part time because their hours were either reduced or they didn’t find a full time job. In case with Frictional unemployment, the number of persons who currently wanted a job but are not in the labor force was 5.3 million and these persons were not counted as unemployed because they were not actively looking for job during the 4 weeks before the survey or they were unavailable to do the job.

The data from BLS mentioned that the persons among those not in the labor force who wanted a job or those number of persons marginally attached to the labor force was at 1.4 million which changed a little in January. These category of individuals did want and were available for work and had looked for a job sometime in the past 12 months but had not looked for jobs in the last 4 weeks before the survey. A category of marginally attached to the jobs workers called as discouraged workers who believed that no jobs were available for them changed a little at 342,000.

Sources:
Bureau of Labor Statistics (https://www.bls.gov/news.release/pdf/empsit.pdf)
Bloomberg LP (https://www.bloomberg.com/news/articles/2023-02-03/us-job-gains-post-surprise-surge-jobless-rate-hits-53-year-low?srnd=economics-v2)