Labor & Workforce

US unemployment rate falls again, now at lowest point in more than 50 years

Washington, Feb 3 (EFE).- The United States’ official unemployment rate fell in January by one-tenth of a point to a seasonally adjusted 3.4 percent, its lowest level in more than 50 years, according to figures published Friday by the Labor Department’s Bureau of Labor Statistics.

A total of 517,000 jobs were created in the first month of 2023, 294,000 more than in the previous month.

That figure was much higher than economists had expected and exceeded monthly average job creation in 2022 (401,000 new jobs).

It also comes despite the US Federal Reserve’s having aggressively raised interest rates – with eight rate hikes since last March – in a bid to bring down high inflation.

The US’s headline jobless rate, known as the U-3, has now fallen for three consecutive months and dipped lower than the 3.5 percent rate that existed prior to the onset of the Covid-19 pandemic in the US.

The last time the unemployment figure was this low was in May 1969, two months before human beings first landed on the Moon.

Employment growth was widespread in January, led by gains in leisure and hospitality (+128,000 jobs), professional and business services (+82,000 jobs) and health care (+58,000 jobs).

Employment also rose in government, due in part to the return of workers after a strike, the BLS said.

The U-3 rate is defined as “total unemployed, as a percent of the civilian labor force.”

Besides that official rate, the BLS also releases other unemployment figures.

Among them is the so-called U-6 rate that also includes discouraged workers and those marginally attached to the work force (people who are not currently looking for work but indicate they want a job and have sought employment in the past year) and which came in at a seasonally adjusted 6.6 percent in January.

The U-6 rate in January was down from 7.1 percent in the same month of 2022 but up one-tenth of a point from December of last year.

On Wednesday, the Federal Reserve announced its eighth consecutive hike in its benchmark federal-funds rate.

That rate that banks charge each other to borrow or lend excess reserves overnight now stands at a target range of between 4.5 percent and 4.75 percent, its highest level in 16 years and up from a range of 0 to 0.25 percent that had existed for two years prior to March 2022.

The US central bank has slowed the pace of its monetary tightening in recent months, only raising the federal-funds rate by a quarter point at this week’s meeting of its monetary policy-making body.

Fed Chairman Jerome Powell cautioned, however, that it is too soon to say the battle has been won against inflation, which fell from an annual rate of 9.1 percent in June (more than four times above the Fed’s 2 percent target) to 6.5 percent in December.

Although a steady increase in interest rates has not yet had an adverse effect on employment, economists expect that an extended period of tight monetary policy will eventually impact the US labor market. EFE


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