Despite fears that the US could be facing an economic slowdown, the Labor Department has reported that jobs growth has surged in the last month.
According to the latest figures, in the last month, approximately 517,000 jobs were added to the US economy. This is much higher than predicted, as experts expected the economy to shrink.
The growth was fuelled by the recovery of the hospitality industry. Other sectors, like manufacturing and the tech industry, reported job losses.
Those sectors are sensitive to borrowing costs, which shot up last year, as the US central bank took steps to stabilise consumer prices.
The unemployment rate was also down in the last month, unexpectedly. It fell to 3.4% in January, which is the lowest rate since 1969.
Forecasters have warned that there is a high risk of recession this year, with slowing home sales, a decline in manufacturing, and a significant reduction in consumer spending.
The cost of living has also been rising for the last year, and the figures show that inflation has been increasing. The Consumer Price Index (CPI) rose 0.4% from September, which is a 7.7% increase since October 2021.
However, despite fears of a recession, the labour market has remained strong and the surge in jobs in January came as a shock to economists. Economist Justin Wolfers, a professor at the University of Michigan, wrote on Twitter following the report that “this is a breathtaking number.”
US President Joe Biden said the report shows: “For the past two years we’ve heard a chorus of critics write off my economic plan. Today’s data makes crystal clear what I’ve always known in my gut – these critics and cynics are wrong.”
Dante DeAntonio, director at Moody’s Analytics, warned that despite the growth seen in the last month is positive news, it’s not a good idea to read into the data of a single month too much. He noted that the company still expects growth to slow dramatically in the coming months and that the risk of the US falling into a recession is still “uncomfortably high”.