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US Job Growth Shows Signs of Slowing Amidst Low Unemployment
Job growth in the United States experienced a slowdown last month; however, the unemployment rate remains at a low level, indicating a resilient, albeit tempered, economic landscape.
According to the Labor Department, employers added 143,000 positions in January, while the unemployment rate dipped slightly to 4% from 4.1%. These figures arrive as President Donald Trump assumes office, outlining ambitious economic reforms, including reductions in government spending, changes to the federal workforce, aggressive deportation policies, and increased tariffs on various imports.
Such proposals have injected a degree of uncertainty regarding the future trajectory of the largest economy in the world. Highlighting this concern, the US central bank recently opted against cutting interest rates, pausing after several reductions that began in September.
Federal Reserve Chairman Jerome Powell noted that previous worries about the job market had diminished, signaling a more stable outlook. Despite the slower job growth recorded for January, analysts do not view the data as alarming. Adjustments to previous reports suggested that job growth in November and December was more robust than initially reported.
Ellen Zentner, the chief economic strategist for Morgan Stanley Wealth Management, remarked, “A lower-than-expected January payrolls number was more than offset by upward revisions to November and December’s totals and a downtick in the unemployment rate.” She further stated that those anticipating a weak job report leading to renewed rate cuts by the Fed were proven wrong.
The job gains in January were primarily propelled by the health care and retail sectors, occurring even as the nation faced challenges from wildfires and winter storms. Additionally, the report indicated an increase in average hourly pay, which rose by 4.1% compared to January 2023.
Updated annual revisions provided a more detailed picture of job growth, reflecting fewer job additions in 2024 than previously thought. Following the report, US stock shares exhibited minor fluctuations.
White House spokesperson Karoline Leavitt stated that the report indicated “the Biden economy was far worse than anyone thought,” highlighting the need for President Trump’s pro-growth strategies.
Despite the revisions, economist Samuel Tombs from Pantheon Macroeconomics asserted that the job market appears to be stabilizing compared to its condition a few months prior and indicated that the firm no longer anticipated a March rate cut from the Fed. He noted, “All told, the economy created fewer jobs than we previously thought last year, but the trend no longer appears to be deteriorating.”
Nevertheless, Tombs cautioned that they still foresee a potential “relapse” in job growth, citing muted hiring indicators and the prevailing uncertainty surrounding the economic policies of the new administration.
Source
www.bbc.com