Despite the gains in robotics and AI over the years, labor is still a vital input. Even with huge swaths of the tech sector laying off employees, the labor market is still going strong, according to the Labor Department. While most would expect a slowdown in labor demand after the holiday season passes through, that wasn’t the case here. Non-farm payrolls were up 517,000, substantially higher than the 188,000 that was expected.
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The unemployment rate itself was down to 3.4%, despite a rate of 3.6% expected. Average hourly earnings against this time last year were also slightly up. Those gained 4.4% against a gain of 4.3% expected. The only thing that came in line with projections was average hourly earnings on a month-over-month basis. Those were up 0.3%.
The individual sectors posting gains suggested some things about the overall economy as well. The biggest increases, for example, were found in leisure and hospitality. That suggests travel is making a comeback from the COVID-19 lockdown phenomenon. Professional and business services had the second-highest gain, followed by government and healthcare. Concerns about a recession still remain. However, the sheer resilience of the job market—which features around two openings for every one worker—suggests otherwise.
ETFs that track the major indices, such as the SPDR S&P 500 ETF Trust (SPY), the Invesco QQQ Trust (QQQ), and the SPDR Dow Jones Industrial Average ETF Trust (DIA), are all down in today’s trading session. This is due to the fear that the Federal Reserve will keep raising rates thanks to the strong labor market.
