The US labor market is expected to lose further momentum in the first month of the year as higher borrowing costs from the Federal Reserve dampened demand for new hires.
Employers in the world’s biggest economy are expected to have added 190,000 jobs in January, according to a consensus forecast compiled by Bloomberg, down from an increase of 223,000 in December. While remaining at a solid pace, a figure in line with estimates would mark the sixth consecutive month of slowing growth.
The unemployment rate is expected to have stabilized just above its pre-pandemic low of 3.6%. The average hourly wage should have increased by 0.3% since December, which would translate into an annual rate of 4.3%.
The data, due out by the Bureau of Labor Statistics at 8:30 a.m. Eastern Time on Friday, as the Federal Reserve debates how much further it needs to tighten monetary policy in order to bring inflation back to its long-standing target of 2%. .
The U.S. central bank this week returned to a more orthodox pace of raising interest rates after a series of big moves last year, raising the federal funds rate by a quarter of a percentage point to a new range. target of 4.50% to 4.75%. hundred.
Speaking on Wednesday, Fed Chairman Jay Powell adopted a more optimistic tone about the economic outlook and the central bank’s handling of what has been one of the worst inflationary shocks in decades. This has ignited speculation that the Fed is about to end its rate hike campaign earlier than expected.
Although he acknowledged that the “disinflationary process” had begun, Powell warned that it was still in the “early stages” and that price pressures remained too intense, especially those related to what he has described as an “extremely tight” labor market.
Underscoring the strength of the job market, job postings in December jumped again, bringing the total number of vacancies to 11 million. Unemployment claims also fell last week to their lowest level in nine months. Wage growth has slowed, however, and companies have begun to cut labor costs, both by cutting working hours and removing temporary workers from their payrolls.
Powell reiterated on Wednesday that there was still a ‘path’ to bring inflation under control without a painful economic slowdown and excessive job losses, although he noted that a ‘softening’ of the labor market would be needed. .
Most economists polled by Bloomberg expect the United States to slide into a recession this year and the unemployment rate to reach nearly 5%.