The US economy added 467,000 jobs last month, far better than expected for the labor market amid a surge in coronavirus cases associated with the Omicron option.
The surprising increase in wages contradicted the forecasts of economists polled by Bloomberg, who predicted profits of 150,000 jobs. This will fuel expectations that the Federal Reserve will move more aggressively than planned to tighten monetary policy to stem inflation.
This will also come as a relief to the White House, which has warned that job growth could be temporarily affected by the rise in Covid-19 infections.
In addition to the jump in wages in January, there were large revisions upwards of data from previous months, while wage growth also rose more than expected.
The unemployment rate rose to 4% despite strong gains of 3.9% before.
US government bonds sold out after the job report on Friday, amid fears that inflation may continue to accelerate. Yields on two-year government bonds, which are sensitive to monetary policy expectations, jumped 0.09 percentage points to 1.28%, the highest level since early 2020.
Data released by the Bureau of Labor Statistics on Friday was collected during the worst of Omicron’s jump in the United States, which fueled a record number of Covid cases, hospitalizations and deaths.
Senior economic officials in the Biden administration tried to stay ahead of Friday’s data, with Brian Deese, director of the National Economic Council, saying this week that January’s employment figures “may seem a little strange.”
The White House cited the stable recovery of the labor market as one of President Joe Biden’s most important achievements during his first year in office, which was otherwise affected by legislative failures. Despite the signing of a two-party infrastructure bill, its landmark package of 1.75 trillion. dollars “Bring back better spending” stopped in Congress.
“It turns out that the peak of Omicron’s cases coincided with the time when wage data was collected,” Jared Bernstein, a member of Biden’s Council of Economic Advisers, told CNN this week. “If you haven’t been to work, if you’ve been on unpaid leave, don’t count as a salary.”
Prior to the winter wave of coronavirus infections, employers were already struggling to fill their ranks as fears of Covid infection and childcare problems prevented many people from joining the workforce.
As a result, the number of job vacancies has increased, with more than 10 million reported in the last month of 2021. That means 1.7 jobs for every unemployed worker, the highest since the U.S. government began collecting data two decades ago.
Some workers seek to take advantage of the search for new employees and have left their jobs in search of higher paid positions. A total of 4.3 million Americans left in December, slightly less than the November 4.5 million record.
Labor costs in the United States, meanwhile, have risen sharply as employers have raised wages and sweetened benefits to compete for talent.
The Federal Reserve is outlining its first interest rate hike in 2018 at its next policy meeting in March. Jay Powell, the Fed’s chairman, said there could be a “softening” in the economy because of Omicron, but said any weakness should be “temporary”.
“We believe that the main force of the economy should show up pretty soon after that,” he told a news conference after a meeting of the Federal Open Market Committee in January.
Rising inflation has forced the Fed to cut back on monetary policy much faster than originally planned. Senior officials have also left the door open for a more aggressive series of interest rate hikes this year or even a half percentage point increase in interest rates, as opposed to quarter-point increases, which have become the norm.
The central bank is also expected to start reducing its balance sheet of nearly $ 9 trillion soon after the first interest rate adjustment in an attempt to further tighten monetary policy settings.
Additional reports by Adam Samson