US job growth takes a breather, unemployment rate at 4.0pc

FE Team | Published: February 08, 2025 00:27:47

WASHINGTON, Feb 7 (Reuters): US job growth slowed more than expected in January after robust gains in the prior two months, but a 4.0% unemployment rate probably will give the Federal Reserve cover to hold off cutting interest rates at least until June.
The Labour Department's closely watched employment report on Friday also showed strong wage growth last month, with average hourly earnings surging, which should keep consumer spending supported. Labor market resilience is the driving force behind the economic expansion.
"This morning's report may be considered a Goldilocks report, not too hot and not too cold," said Jeffrey Roach, chief economist at LPL Financial. "An unemployment rate at 4% is considered very low, giving the Fed reason to keep fed funds unchanged in the near term."
Nonfarm payrolls increased by 143,000 jobs last month after rising by an upwardly revised 307,000 in December, the Labor Department's Bureau of Labor Statistics said. The moderation in job gains was payback after payrolls also surged by 261,000 jobs in November. Economists polled by Reuters had expected the establishment survey to show 170,000 jobs added, with estimates ranging from 60,000 to 250,000.
The BLS said wildfires in Southern California and frigid temperatures in large parts of the country in January had "no discernible effect" on payrolls. But the household survey showed 573,000 people failed to report for work because of weather conditions, the highest for any January since 2011.
The healthcare sector continued to dominate employment gains, adding 44,000 jobs spread across hospitals, nursing and residential care facilities as well as home health care services. Retail employment increased by 34,000 jobs, mostly at general merchandise retailers.
Social assistance payrolls rose by 22,000 jobs. Government employment increased further, with 32,000 positions added. Momentum in that category, however, is likely to slow considerably amid the Trump administration's moves to slash federal government jobs. Government employment, including state and local government, has been a major contributor to job growth.
Employment was little changed in construction, manufacturing, wholesale trade, transportation and warehousing, information, financial activities, professional and business services, and the leisure and hospitality industry.