U.S. President Joe Biden seized an unexpected rise in employment last month to show the resilience of the U.S. recovery and recharge the public’s confidence in its handling of the economy.
“America’s work machine is going stronger than ever,” Biden said from the White House on Friday after data showed that the US economy added 467,000 jobs last month despite the rise of Omicron. “[It’s] promoting a strong recovery and opportunity for hardworking women and men across this wonderful country. America is back to work. ”
The surprising increase in payrolls has resisted predictions by economists polled by Bloomberg, which projected job growth of 150,000.
In addition to the jump in payrolls in January, there has been major upward revision of data from previous months, with the Bureau of Labor Statistics counting the number of jobs created in November and December by about 700,000 too low.
The monthly revisions of 398,000 for November and 311,000 for December were each greater than the largest single upward review posted in April 1981, on a seasonally adjusted basis.
The strong data, which also showed wage growth rising more than predicted, would be a relief for a White House that has warned that job growth could be temporarily hit by the jump in Covid-19 infections. This will raise expectations that the Federal Reserve will move more aggressively than planned to tighten monetary policy to eradicate inflation.
The unemployment rate climbed to 4 percent despite the sharp rises, from 3.9 percent previously.
US government bonds sold sharply after Friday’s work report, which raised Treasury yields to their highest level since the start of the pandemic. The fall in the price of debt, which is reversing to yields, is also increasing pressure on the central bank to fight inflation.
The biggest gains came in shorter-term maturities, suggesting investors are betting it will give the Fed more ammunition to raise interest rates. The 30-year real rate has risen above zero for the first time since June 2020.
The BLS data on Friday was collected during the worst of the Omicron boom in the US, which fueled a record number of Covid-19 cases, hospital admissions and deaths.
The White House cited the strong recovery of the labor market as one of Biden’s most important achievements in his first year in office, which was otherwise plagued by legislative setbacks.
Despite the signing of a two-party infrastructure bill and a major fiscal stimulus bill, its landmark $ 1.75tn Build Back Better spending package came to a standstill in Congress.
But Biden on Friday cited recent announcements by Intel and General Motors to open manufacturing plants in industrialized states such as Ohio and Michigan as proof that his plans are working. “These announcements are the beating of a job revival, unlike anything we’ve seen in our history – and it did not happen by chance,” he said.
Before the winter wave of coronavirus infections, employers struggled to fill their ranks as concerns about contracting the virus and childcare issues deterred many people from joining the workforce.
The number of jobs has increased as a result, with more than 10 million reported in the last month of 2021. That equates to 1.7 jobs for every unemployed worker, the highest since the U.S. government began collecting data two decades ago.
Some workers tried to capitalize on the demand for new employees and left their jobs in search of higher paying roles. A total of 4.3 million Americans quit in December, only ashamed of November’s record of 4.5 million.
U.S. labor costs, in turn, rose as employers raised wages and sweetened benefits to compete for talent. Hourly earnings rose 5.7 percent last month compared to a year earlier, and 0.7 percent compared to December, a larger jump than expected.
The Fed sets a rate after its first interest rate hike since 2018 at its next policy meeting in March.
Increased inflation has forced the central bank to scale down its monetary policy support much faster than planned. Top officials have also left the door open for a more aggressive series of interest rate hikes this year or even to raise rates by half a percentage point, as opposed to the quarter-point hikes that have become the norm.
After Friday’s data, the number of interest rate hikes praised by the futures market rose to more than five by the end of 2022.
Additional post by Adam Simson