The US Added Lots And Lots Of Jobs

The US Added Lots And Lots Of Jobs

about 1 year ago2 mins

Mentioned in story

Fresh data out on Friday showed that the US added more jobs than expected last month – and heaven knows… ah, you know the rest.

What does this mean?

It seemed like the Federal Reserve (the Fed) had put the kibosh on the hot-to-trot labor market, with job growth slowing down for 5 months in a row – but Friday’s data showed that the market still had some fight in it. The US economy added a huge 517,000 jobs last month, way more than the 188,000 the eggheads were expecting, notching up the biggest gain since last July. Plus, with the unemployment rate hitting 3.4% – the lowest since groovy ol’ 1969 – and demand for workers still lively, companies have nearly twice as many job openings as there are workers available. With competition like that, it’s no wonder wages grew faster than expected compared to the same time last year.

US jobs
Source: The New York Times

Why should I care?

For markets: Not-so-soft landing.

This data will throw a wrench in the works for the Fed, which made its interest rate hikes a little gentler just last week. See, the Fed’s hoping for a “soft landing”, a win-win scenario where inflation slips without hitting employment and the economy too hard. But to make that happen, the central bank’s made it clear that wage growth needs to play ball – something that isn’t panning out right now. That’s got traders betting the Fed will have to extend its hike run, which might be why US stock markets took a tumble after the news.

US wage growth
Source: Reuters

The bigger picture: All fired up.

This news suggests that tech companies' mass layoffs are the exception rather than the rule – but those cost-cutting firings have won investors’ admiration. Since their job-cutting sprees, Amazon, Meta, Alphabet, and Microsoft have managed to add a combined $800 billion to their market value. That’s probably cold comfort for their axed employees though…

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