Evelyn Reynolds

Nonfarm payrolls expanded by 353,000 for the month, better than the Dow Jones estimate for 185,000. The unemployment rate held at 3.7%, against the estimate for 3.8%.
Average hourly earnings increased 0.6%, double the monthly estimate. On a year-over-year basis, wages jumped 4.5%, well above the 4.1% forecast.
Job growth was widespread in January, led by professional and business services with 74,000. Other significant contributors included health care (70,000) and retail trade (45,000).

Job growth posted a surprisingly strong increase in January, demonstrating again that the U.S. labor market is solid and poised to support broader economic growth.
Nonfarm payrolls expanded by 353,000 for the month, much better than the Dow Jones estimate for 185,000, the Labor Department’s Bureau of Labor Statistics reported Friday. The unemployment rate held at 3.7%, against the estimate for 3.8%.

Wage growth also showed strength, as average hourly earnings increased 0.6%, double the monthly estimate. On a year-over-year basis, wages jumped 4.5%, well above the 4.1% forecast. The wage gains came amid a decline in average hours worked, down to 34.1, or 0.2 hour lower for the month.

Job growth was widespread on the month, led by professional and business services with 74,000. Other significant contributors included health care (70,000), retail trade (45,000), government (36,000), social assistance (30,000) and manufacturing (23,000).
“This just reaffirms that the jobs market is entering 2024 on solid ground,” said Daniel Zhao, lead economist at Glassdoor. “The fact that job growth was so widespread across industries is a healthy sign. Coming into today’s report, we were concerned about how concentrated jobs were in really just three sectors — health care, education and government. While it is great to see those sectors drive job gains, there was no guarantee that would be enough to support a health labor market.”
The report also indicated that December’s job gains were much better than originally reported. The month posted a gain of 333,000, which was an upward revision of 117,000 from the initial estimate. November also was revised up, to 182,000, or 9,000 higher than the last estimate.
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While the report demonstrated the resilience of the U.S. economy, it also could raise questions about how soon the Federal Reserve will be able to lower interest rates.
“Make no mistake, this was a blowout jobs report and will vindicate the recent posturing by the Fed which effectively ruled out an interest rate cut in March,” said George Mateyo, chief investment officer at Key Private Bank. “Moreover, strong job gains combined with faster than expected wage gains may suggest an additional delay in rate cuts for 2024 and should cause some market participants to recalibrate their thinking.”

Futures markets shifted after the report, with traders now pricing in a better than 80% chance that the Fed does not cut interest rates at its March meeting, according to the CME Group.
Stocks were mixed following the report. The Dow Jones Industrial Average dropped at the open but the S&P 500 and Nasdaq both were positive. Treasury yields surged.
The January payrolls count comes with economists and policymakers closely watching employment figures for direction on the larger economy. Some high-profile layoffs recently have raised questions about the durability of what has been a powerful trend in hiring.
A more encompassing measure of unemployment that includes discouraged workers and those holding part-time jobs for economic reasons edged higher to 7.2%. The household survey, which measures the number of people actually holding jobs, differed sharply from the establishment survey, showing a decline of 31,000 on the month. The labor force participation rate was unchanged at 62.5%.

One potentially important caveat in the report could be the divergence between average hourly earnings and hours worked. Retail trade saw a fresh historical low of 29.1 hour in data going back to March 2006.
“This suggests that employers chose to reduce hours rather than resort to layoffs for the moment,” the Conference Board said in a report analysis.
Broader layoff numbers, such as the Labor Department’s weekly report on initial jobless claims, show companies hesitant to part with workers in such a tight labor market.
Gross domestic product growth also has defied expectations.
The fourth quarter saw GDP increase at a strong 3.3% annualized pace, closing out a year in which the economy defied widespread predictions for a recession. Growth in 2023 came even as the Fed further raised interest rates in its quest to bring down inflation.
The Atlanta Fed’s GDPNow tracker is pointing toward a 4.2% gain in the first quarter of 2024, albeit with limited data of where things are heading for the first three months of the year.
The economic, employment and inflation dynamics make for a complicated picture as the Fed seeks to ease monetary policy. Earlier this week, the Fed again held benchmark short-term borrowing costs steady and indicated that rate cuts could be ahead but not until inflation shows further signs of cooling.

Chair Jerome Powell indicated in his post-meeting news conference that the central bank does not have a “growth mandate” and said central bankers remain concerned about the impact that high inflation is having on consumers, particularly those on the lower end of the income scale.
Outside of the wage numbers, recent data is showing that inflation is moving in the right direction.
Core inflation as measured by personal consumption expenditures prices was just 2.9% in December on a year-over-year basis, while six- and three-month gauges both indicated the Fed is at or around its 2% goal.
Still, the Atlanta Fed’s measure of “sticky” inflation, which focuses on items such as housing, medical care services and insurance costs, was at 4.6% on a 12-month basis in December.
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New research finds that former President Donald J. Trump’s tariffs did not bring back U.S. jobs, but voters appeared to reward him for the levies anyway.The sweeping tariffs that former President Donald J. Trump imposed on China and other American trading partners were simultaneously a political success and an economic failure, a new study suggests. That’s because the levies won over voters for the Republican Party even though they did not bring back jobs.The nonpartisan working paper examines monthly data on U.S. employment by industry to find that the tariffs that Mr. Trump placed on foreign metals, washing machines and an array of goods from China starting in 2018 neither raised nor lowered the overall number of jobs in the affected industries.But the tariffs did incite other countries to impose their own retaliatory tariffs on American products, making them more expensive to sell overseas, and those levies had a negative effect on American jobs, the paper finds. That was particularly true in agriculture: Farmers who exported soybeans, cotton and sorghum to China were hit by Beijing’s decision to raise tariffs on those products to as much as 25 percent.The Trump administration aimed to offset those losses by offering financial support for farmers, ultimately giving out $23 billion in 2018 and 2019. But those funds were distributed unevenly, a government assessment found, and the economists say those subsidies only partially mitigated the harm that had been caused by the tariffs.The findings contradict Mr. Trump’s claims that his tariffs helped to reverse some of the damage done by competition from China and bring back American manufacturing jobs that had gone overseas. The economists conclude that the aggregate effect on U.S. jobs of the three measures — the original tariffs, retaliatory tariffs and subsidies granted to farmers — were “at best a wash, and it may have been mildly negative.”“Certainly you can reject the hypothesis that this tariff policy was very successful at bringing back jobs to those industries that got a lot of exposure to that tariff war,” one of the study authors, David Dorn of the University of Zurich, said in an interview.We are having trouble retrieving the article content.Please enable JavaScript in your browser settings.Thank you for your patience while we verify access. If you are in Reader mode please exit and log into your Times account, or subscribe for all of The Times.Thank you for your patience while we verify access.Already a subscriber? Log in.Want all of The Times? Subscribe. More

President Biden has begun to accuse stores of overcharging shoppers, as food costs remain a burden for consumers and a political problem for the president.President Biden, whose approval rating has suffered amid high inflation, is beginning to pressure large grocery chains to slash food prices for American consumers, accusing the stores of reaping excess profits and ripping off shoppers.“There are still too many corporations in America ripping people off: price gouging, junk fees, greedflation, shrinkflation,” Mr. Biden said last week in South Carolina. Aides say those comments are a preview of more pressure to come against grocery chains and other companies that are maintaining higher-than-usual profit margins after a period of rapid price growth.Mr. Biden’s public offensive reflects the political reality that, while inflation is moderating, voters are angry about how much they are paying at the grocery store and that is weighing on Mr. Biden’s approval rating ahead of the 2024 election.Economic research suggests the cost of eggs, milk and other staples — which consumers buy far more frequently than big-ticket items like furniture or electronics — play an outsized role in shaping Americans’ views of inflation. Those prices jumped by more than 11 percent in 2022 and by 5 percent last year, amid a post-pandemic inflation surge that was the nation’s fastest burst of price increases in four decades.The rate of increase is slowing rapidly: In December, prices for food consumed at home were up by just over 1 percent, according to the Labor Department. But administration officials say Mr. Biden is keenly aware that prices remain too elevated for many families, even as key items, like gasoline and household furnishings, are now cheaper than they were at their post-pandemic peak.And yet, there is a general belief across administration officials and their allies that there is little else Mr. Biden could do unilaterally to force grocery prices down quickly.Grocery store margins are rising

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Operating profit margin by type of retailer
Notes: Operating margin defined as sales, receipts and operating revenue as a share of operating expenses. Data shown as four-quarter rolling average.Source: Council of Economic AdvisersBy The New York TimesWe are having trouble retrieving the article content.Please enable JavaScript in your browser settings.Thank you for your patience while we verify access. If you are in Reader mode please exit and log into your Times account, or subscribe for all of The Times.Thank you for your patience while we verify access.Already a subscriber? Log in.Want all of The Times? Subscribe. More

A UPS driver makes a delivery on January 30, 2024 in Miami Beach, Florida. 
Joe Raedle | Getty Images

Companies announced the highest level of job cuts in January since early 2023, a potential trouble spot for a labor market that will be in sharp focus this year, according to a report Thursday from Challenger, Gray & Christmas.
The job outplacement firm said planned layoffs totaled 82,307 for the month, a jump of 136% from December though still down 20% from the same period a year ago.

It was the second-highest layoff total and the lowest planned hiring level for the month of January in data going back to 2009.
Technology and finance were the hardest-hit sectors, with high-flying Silicon Valley leaders such as Microsoft, Alphabet and PayPal announcing workforce cuts to start the year. Amazon also said it would be cutting as did UPS in the biggest month for layoffs since March 2023.
“Waves of layoff announcements hit US-based companies in January after a quiet fourth quarter,” said Andrew Challenger, senior vice president of the firm. The cuts were “driven by broader economic trends and a strategic shift towards increased automation and AI adoption in various sectors, though in most cases, companies point to cost-cutting as the main driver for layoffs,”
Financial sector layoffs totaled 23,238, the worst month for the category since September 2018. Tech layoffs totaled 15,806, the highest since May 2023. Food producers announced 6,656, the highest since November 2012.
“High costs and advancing automation technology are reshaping the food production industry. Additionally, climate change and immigration policies are influencing labor dynamics and operational challenges in this sector,” Challenger said.

The report follows news Wednesday from ADP that private payrolls increased by just 107,000 for the month. On Friday, the Labor Department will be releasing its nonfarm payrolls count, which is expected to show growth of 185,000.
Initial jobless claims totaled 224,000 for the week ended Jan. 27, up 9,000 from the previous week. Continuing claims, which run a week behind, jumped by 70,000, the Labor Department reported Thursday.
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Euro zone headline inflation eased slightly in January, flash figures published by the European Union’s statistics agency showed on Thursday, while core figures declined less than expected.
Annual headline price rises came in at 2.8%, in line with a forecast of economists polled by Reuters. Inflation stood at 2.9% in December, up from 2.4% in November, largely due to the wind-down of energy price support measures.
Core inflation dipped to 3.3% in January from 3.4% in December. A Reuters forecast indicated a fall to 3.2% for last month.

Patrons at sidewalk tables of Janis bar in Cais do Sodre in Lisbon, Portugal.
Horacio Villalobos | Corbis News | Getty Images

Euro zone headline inflation eased slightly in January, flash figures published by the European Union’s statistics agency showed on Thursday, while core figures declined less than expected.
Annual headline price rises came in at 2.8%, in line with a forecast of economists polled by Reuters. Inflation stood at 2.9% in December, up from 2.4% in November, largely due to the wind-down of energy price support measures.

Core inflation dipped to 3.3% in January from 3.4% in December. A Reuters forecast indicated a fall to 3.2% for last month.
By sector, services inflation — an important gauge for policymakers due to its link to domestic wage pressures — held steady at 4%. Disinflationary effects from the energy market continued to reduce, from -6.7% to -6.3%.
Economic growth has been stagnating in the bloc.
Preliminary figures out earlier this week showed inflation in Germany easing slightly more than had been forecast, reaching 3.1%. The euro zone’s biggest economy has become one of its main drags on growth, with the German GDP contracting by 0.3% in the fourth quarter.
European Central Bank officials are monitoring a host of data to see if and when they can begin bringing interest rates down from their current record highs. Price rises have cooled significantly from a peak of 10.6% in October 2022, with the central bank’s 2% target coming into sight.

While markets continue to price in cuts starting in April, some policymakers have pushed back with suggestions that declines are likelier to take place in the summer or even later. The ECB stresses it remains data-dependent.
At last week’s monetary policy meeting, when interest rates were left unchanged, ECB President Christine Lagarde said that the “disinflation process is at work” despite the December uptick.
Kamil Kovar, senior economist at Moody’s Analytics, said the figures presented a “mixed bag.”
“The decline to 2.8% was welcome news, especially relative to ECB projections that were for an increase in the inflation rate. But it was driven by a downside surprise in energy, which is all the more shocking given the end of government interventions,” Kovar said in emailed comments.
“However, core inflation only inched lower, with services especially coming in quite hot. While some of this hot reading is explained by regular annual re-pricing and a change in weights, it nevertheless makes a March rate cut a pipe dream, and raises [the] bar for a cut in April. A cut in June remains our baseline forecast.” More

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The retail giant, which last opened a domestic location in 2021, said most of the stores would be newly built.Walmart will add 150 stores in the United States over the next five years, a major expansion drive for the retail giant.The company said the move, which it announced in a statement on Wednesday, would involve millions of dollars in investment. Walmart employs roughly 1.6 million people in the United States, and said it hires hundreds of people each time it opens a new store.Walmart had just over 4,600 stores nationwide at the end of October, down from more than 4,700 a year earlier. The company has not opened a new U.S. store since late 2021.Most of the stores that Walmart plans to open will be newly built, while others will be conversions of existing locations to new formats. The first two new stores will open in the spring, in Florida and Georgia, and the company is completing construction plans for 12 other stores this year. It also said it would remodel 650 locations.Walmart announced this week that it was raising salaries and benefits for store managers and offering them stock grants.The company reported sharply higher profit in the first three quarters of 2023, and its share price is hovering near a record high. It has yet to report earnings for its most recent quarter, which included the holiday season.Consumer spending, which powers the U.S. economy, has been resilient even though shoppers have been squeezed by high inflation and rising interest rates. Credit card data from the holiday season showed retail sales increased from a year earlier.“This is a huge vote of confidence in the American consumer,” Craig Johnson, the founder of the retail consultancy Customer Growth Partners, said of Walmart’s announcement.Mr. Johnson said investors might be concerned over how this could affect Walmart’s Sam’s Club stores, which have increasingly moved from a destination for business owners to stock up on supplies to a place where individuals shop for groceries.Walmart’s choice to open new stores and remodel some existing ones reflects the company’s focus on enhancing its in-store and pickup experiences even as e-commerce has gained popularity, said Edward Yruma, an analyst at the investment bank Piper Sandler.“As we settle into the new normal, what we’ve come to is that the consumer likes great, physical retail locations,” he said.Jordyn Holman More

Companies added 107,000 workers in the first month of 2024, off from the downwardly revised 158,000 in December, ADP reported Wednesday.
Leisure and hospitality reported the biggest increase, with an addition of 28,000 workers, while trade, transportation and utilities added 23,000 and construction rose by 22,000.
The release comes two days ahead of the Labor Department’s nonfarm payrolls report, which is expected to show growth of 185,000.

A 7-Eleven convenience store has a sign in the window reading “Now Hiring” in Cambridge, Massachusetts, U.S., July 8, 2022. 
Brian Snyder | Reuters

Private payroll growth declined sharply in January, a possible sign that the U.S. labor market is heading for a slowdown this year, ADP reported Wednesday.
Companies added 107,000 workers in the first month of 2024, off from the downwardly revised 158,000 in December and below the Dow Jones estimate for 150,000, according to the payrolls processing firm.

Only one sector — information services (-9,000) — reported a decline, but hiring was slow across virtually all sectors.
Leisure and hospitality reported the biggest increase, with an addition of 28,000 workers, while trade, transportation and utilities added 23,000 and construction rose by 22,000. Services-providing companies were responsible for 77,000 jobs, with goods producers adding the rest.
The release comes two days ahead of the Labor Department’s nonfarm payrolls report, which is expected to show growth of 185,000, against the 216,000 increase in December. While the ADP report can provide a barometer for private-sector hiring, the two reports often differ, with ADP often undershooting the Labor Department’s numbers.
On wage gains, ADP reported a 5.2% annual increase, a number that has run above the government’s measure of average hourly earnings.
“Wages adjusted for inflation have improved over the past six months, and the economy looks like it’s headed toward a soft landing in the U.S. and globally,” said ADP chief economist Nela Richardson.
Mid-size establishments, with between 50 and 499 employees, led job creation, adding 61,000. Small business added just 25,000. More