Economic Report: U.S. jobs report shows blowout 517,000 gain in employment in January
The numbers: The number of new jobs created in January rose by 517,000 to mark the biggest increase in six months, suggesting persistent strength in a dynamic U.S. labor market even though the economy has shown lots of signs of weakening.
The increase in new jobs was much stronger than the 187,000 forecast of economists polled by The Wall Street Journal.
One caveat: The government’s formula to adjust for seasonal swings in hiring sometimes exaggerates employment levels in January. It’s unclear whether that was the case last month.
Yet employment grew even faster in the waning months of 2022 than previously reported, indicating the labor market is still quite robust.
What’s more, the unemployment rate slid to a 54-year low of 3.4% from 3.5%, the government said Friday. That’s the lowest level since 1969.
In another sign of the strong demand for labor, the number of hours people work jumped 0.3 hours to 34.7 hours, matching the highest level in a year.
The only sign of moderation in the report was a 0.3% increase in hourly pay.
As a result, the increase in hourly pay over the past year slowed again to 4.4% from 4.8%, indicating some relaxation in wage pressures.
Still, the broad strength of the report is likely to worry the Federal Reserve and keep the pressure on the central bank to raise interest rates.
The Fed has been worried about the tight labor market driving up wages and making it harder to bring down high inflation.
fell in premarket trades and bond yields rose after the report.
Big picture: The economy is slowing and the threat of recession is rising as higher interest rates depress growth. Many large companies such as Amazon
have announced layoffs and more job cuts are expected.
Yet the labor market has also proven quite resilient and lots of businesses are reluctant to fire workers given how hard it was to hire them in the first place. The U.S. might even be able to avoid a recession if job losses remain on the low side.
The path of the economy will depend on how much higher the Fed raises interest rates in its battle to quell inflation. Price pressures are receding, but inflation is still way too high for the Fed to stomach.
Market reaction: The Dow Jones Industrial Average DJIA and S&P 500 SPX were set to open lower in Friday trades.