What does US jobs data for January indicate?

The US economy added 517,000 non-farm jobs in January, according to data from US Bureau of Labor Statistics.  Unemployment rate stood at 3.4% in the month. Average monthly job addition in the previous year, 2022, stood at 401,000. Number of unemployed people, looking for jobs stood at 5.7 million. 

The biggest job additions were made in the leisure & hospitality sector, in the month of January. 128,000 new jobs were created in this sector in January. This sector was the worst hit by Covid lockdowns and restrictions. 99,000 of these jobs were created in restaurants & bars. Even after this addition, employment in this sector remains below the employment in February 2020 by 2.9% or 495000. February 2020 was the month before Covid lockdowns & restrictions were imposed on the economy.

74,000 jobs were created in the Government sector, in the month. A lot of these job additions were because of ending of strikes by many university workers. 

58,000 new jobs were created in the healthcare sector in US, in January. 30,000 jobs were created in the retail sector. The brick-and-mortar retail sector was also hit by Covid lockdowns and restrictions. 25,000 jobs were added in the construction sector. 

19000 jobs were added in the manufacturing sector in the month. This was below the average monthly job creation of 33,000 in this sector, in 2022.  The adverse impact of continued interest rate hikes by US Federal Reserve may be one reason for slowing down of job creation in the sector in the month.

Average hourly wage increased by 10 cents or 0.3% to $33.03 per hour in January, over that in December. In the past 1-year, average hourly wage has increased by 4.4%. Consumer Price Inflation in this period stood at 6.4%. This indicates that real income of Americans have gone down. 

Decline in real income coupled with successive interest rate hikes is likely to hurt consumption in the US economy. Consumption makes up the biggest chunk of US GDP pie. In 2022 it accounted for 68% of US GDP. Any further slowdown in Consumption will exacerbate the economic slowdown further.