US job growth: Last month, job growth in the United States remained robust, although wages rose rapidly, indicating that the world’s largest economy is still fighting to contain increasing costs.
Official numbers show that employers gained 263,000 jobs last year, while average hourly compensation increased by 5.1%. The unemployment rate stayed unchanged at 3.7%. The report was stronger than expected, despite the Federal Reserve’s efforts to cool the economy and stabilize prices by raising interest rates.
In response to inflation – the rate at which prices are rising that is nearing a 40-year high, the Federal Reserve has increased interest rates this year at the fastest rate since the 1980s. Analysts have foreseen a decline in job creation as a result of businesses slowing expansion or cutting back due to higher costs. In spite of reports of layoffs in certain industries, such as housing and technology, the US Department of Labor indicated on Friday that the labor market remains robust.
In November, bars, restaurants, and healthcare companies were the primary employers. Even in areas like as construction and manufacturing, which were projected to face job losses, employment increased. Analysts opined that this could be good news for workers, given the concern that rising borrowing costs could precipitate a painful rise in unemployment.
The strong wage growth, they added, will continue to exert upward pressure on prices, suggesting that the Federal Reserve will continue to raise interest rates in the coming months.
“Fed officials will not have missed the fact that average hourly earnings have steadily increased over the past three months, exceeding all expectations and moving in the opposite direction of what they desire,” said Seema Shah, chief global strategist at Principal Asset Management. “Yes, it’s a positive thing that the US labor market is so vigorous. But it is really alarming that wage pressures continue to increase.”
While wages are rising, they are not increasing as quickly as prices. The inflation rate reached 7.7% last month. Even though the unemployment rate has decreased since June, when it reached 9.1%, it is still near a 40-year high.
Ian Shepherdson of Pantheon Macroeconomics stated, “We still believe a moderation in wage growth is likely, but only because we expect payrolls to soften significantly in the first quarter due to both slower gross hiring and rising layoffs.” “Emerging evidence on both is consistent with this narrative, but the Fed must see it in the hard employment data”
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