WASHINGTON — The US economy added an astonishing 517,000 jobs in January, showing that the labor market isn’t ready to cool down just yet, according to new data released Friday by the Bureau of Labor Statistics.
The unemployment rate fell to 3.4% from 3.5%, hitting a level not seen since before Neil Armstrong stepped on the moon.
Economists were expecting 185,000 jobs would be added last month, according to consensus estimates on Refinitiv.
“With 517,000 new jobs added in January 2023 and the unemployment rate at 3.4%, this is a blockbuster report demonstrating that the labor market is more like a bullet train,” Becky Frankiewicz, president and chief commercial officer of ManpowerGroup, said Friday.
The juggernaut of a report may cause complications for the Federal Reserve, which has been trying to tame high inflation with higher interest rates, said Seema Shah, chief global strategist of Principal Asset Management.
“This is a labor market on heat; nobody would have expected a number as monstrous as this,” Shah said in a statement. “Is [Fed Chair Jerome] Powell now wondering why he didn’t push back on the loosening in financial conditions? It’s difficult to see how wage pressures can possibly soften sufficiently when jobs growth is as strong as this, and it’s even more difficult to see the Fed stop raising rates and entertain ideas of rate cuts when there is such explosive economic news coming in.”
“The market is going to go through a rollercoaster ride as it tries to decide if this is good or bad news. For now, though, looks like the US economy is doing absolutely fine,” she said.
Wage growth slowed in January, with average hourly earnings falling 0.4 percentage points to 4.4% year over year.
The labor force participation rate increased to 62.4% from 62.3%.
Every January, the BLS makes revisions on its employment data to reflect updated population estimates and other factors.
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