US job growth accelerated in January and wages increased

US job growth accelerated in January due to strong economic performance and higher worker productivity, which likely encouraged companies to hire more workers and not lay them off, a trend that may protect the economy from a recession this year.

According to Reuters, the Labor Department’s Bureau of Labor Statistics said on Friday that nonfarm payrolls increased by 353,000 last month. The data for December was amended upward, increasing jobs to 333,000 instead of the 216,000 previously announced.

Economists polled by Reuters had expected the number of jobs to increase by 180,000.

Job growth is still well above the rate needed to keep pace with the growth of the working-age population, estimated at about 100,000 jobs per month.

On the other hand, the labor market’s momentum slowed from its strong pace in 2022 due to the Federal Reserve (US central bank) raising interest rates sharply.

Average hourly earnings rose 0.6% last month after increasing 0.4% in December. On an annual basis, wages increased 4.5 percent through January.

The annual rate of wage growth remains well above its pre-Covid-19 pandemic average and the 3.0 to 3.5% range that most policymakers see as consistent with the US central bank’s 2% inflation target.

The unemployment rate reached 3.7% in January.

The Federal Reserve kept interest rates unchanged on Wednesday, and Chairman Jerome Powell told reporters that interest rates have peaked and will decline in the coming months, which shows the strength of the economy.