The U.S. economy added jobs at its fastest pace since last July. Here are the five things we learned from U.S. economic data released during the week ending February 3.
Payrolls surged in January. Nonfarm payrolls swelled by a seasonally adjusted 517,000, up for smaller (if still robust) gains in November and December of 290,000 and 260,000, respectively. The Bureau of Labor Statistics notes that private sector payrolls jumped 443,000, split by gains of 397,000 and 46,000 in the service and goods-producing sides of the economy. Industries with the largest payroll gains were leisure/hospitality (+128,000), professional/business services (+82,000), health care/social assistance (+79,200), and retail (+30,100). Government payrolls expanded by 74,000 (partly resulting from the settling of a strike). Average weekly earnings of $1,146.14 were up 4.7 percent from a year earlier.
Based on a separate household survey, the unemployment rate dropped by 1/10th of a percentage point to 3.4 percent (a 53-year low). Edging up by 1/10th of a percentage point was the labor force participation rate to 62.4 percent. The participation rate for adults 25-54 added 3/10ths of a percentage point to 82.7 percent. The rate remained 4/10ths of a point below its January 2020 reading (the post-Great Recession recovery peak). Rising were the count of part-time workers seeking a full-time opportunity (+172,000 to 4.050 million (January 2022: 3.735 million)) and the median length of unemployment (up 2/10ths of a week to 9.1 weeks (January 2022: 9.6 weeks)). The broadest measure of labor underutilization—the U-6 series—added 1/10th of a percentage point to a still very low 6.6 percent.
A slowdown in inflation led to a smaller interest rate bump. The statement released following the past week’s Federal Open Market Committee (FOMC) meeting noted that inflation “has eased somewhat but remains elevated,” spending and production had “modest growth,” and that the job market was “robust.” As a result, the committee voted, without dissent, to bump up the fed funds target rate by 25 basis points to a range between 4.5 percent and 4.75 percent. This was the Fed’s smallest rate hike since it started this campaign last year. The committee also reaffirmed its commitment to shed more Treasury and mortgage-back securities from the Fed’s balance sheet. The statement continued to note that the “Committee is strongly committed to returning inflation to its 2 percent objective.”
The number of unfilled jobs rose as 2022 ended. The Bureau of Labor Statistics reports that there were a seasonally adjusted 11.012 million open jobs at the end of December, up 572,000 for the month but off 3.8 percent from a year earlier. The private sector had 9.931 million available jobs. Industries with more than a million open positions were: professional/business services, health care/social assistance, accommodation/hospitality, retail, and the government. Hiring grew by 131,000 to 6.165 million (-4.4 percent versus December 2021), including 5.741 million jobs in the private sector. 5.890 million people separated from their jobs in December, up 59,000 for the month but down 2.5 percent from a year earlier. Layoffs grew by 50,000 to 1.468 million, while quits slipped by 15,000 to 4.087 million.
Manufacturing slowed and the service sector rebounded in January. The PMI, the headline index from the Institute for Supply Management’s Manufacturing Report on Business, lost a point to 47.4. The PMI has had a contractionary sub-50.0 reading for three straight months and was at its lowest point since May 2020. Measures for new orders, production, employment, and inventories dropped in January, with all but employment below a reading of 50.0. Only two manufacturing industries—transportation and “miscellaneous”—reported growing. Fifteen others contracted, including those for wood products, textiles, and paper products.
Meanwhile, the Services PMI surged 6.0 points to a reading of 55.2, reclaiming all it lost in December. Also rebounding were measures for business activity/production, new orders, and employment. Ten of 18 tracked service sector industries expanded in January, led by agriculture, management of companies, and public administration. The press release said that most “panelists indicated that business is trending in a positive direction.”
Consumer confidence slipped in January. The Conference Board’s Consumer Confidence Index lost 1.9 points to a seasonally adjusted 107.1 (1985=100). A year earlier, the same measure was at 113.8. The current conditions index jumped 3.5 points to 150.9, while the expectations index shed 5.6 points to 77.8. The press release notes that expectations below 80 “often signals a recession within a year.” 20.2 percent of consumers said business conditions were “good,” while 19.2 percent said they were “bad.”18.7 percent of survey respondents expect business conditions will improve, compared to 21.6 percent who anticipate a decline.
Other U.S. economic data released over the past week:
- Jobless Claims (Week ending January 28, 2023, First-Time Claims, seasonally adjusted): 183,000, -3,000 vs. the previous week, -30,000 vs. the same week a year earlier). 4-week moving average: 191,750 (-16.1% vs. the same week a year earlier).
- Factory Orders (December 2022, New Orders for Manufactured Goods, seasonally adjusted): $552.5 billion (+1.8% vs. November 2022). For all of 2022: $6.505 trillion (+11.8% vs. 2021).
- Vehicle Sales (January 2023, Light Truck and Automobile Sales, seasonally adjusted annualized rate): 15.738 million vehicles (+17.7% vs. December 2022; +4.1% vs. January 2022).
- Construction Spending (December 2022, Value of Construction Put in Place, seasonally adjusted annualized rate): $1.820 trillion (+0.4% vs. November 2022; +7.7% vs. December 2021).
- FHFA House Price Index (November 2022, Purchase-Only Index, seasonally adjusted): -0.1% vs. October 2022; +8.2% vs. November 2021.
- S&P Case-Shiller Housing Price Index (November 2022, National Index, seasonally adjusted): -0.3% vs. October 2022; +7.7% vs. November 2021.
- Productivity (2022Q4, Nonfarm Business Labor Productivity, seasonally adjusted annualized rate): +3.0% vs. 2022Q3; -1.5% vs. 2021Q4
- Agricultural Prices (December 2022, Prices Received by Farmers, not seasonally adjusted): +3.1% vs. November 2022; +22.2% vs. December 2021.
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What We Learned About the U.S. Economy Last Week 