US job growth unexpectedly surges in January as economy adds 517,000 new positions

U.S. hiring roared back to life in January as the labor market remained surprisingly resilient in the face of higher interest rates, scorching-hot inflation and mounting recession fears.

Employers added 517,000 jobs in January, the Labor Department said in its monthly payroll report released Friday, easily topping the 185,000 jobs forecast by Refinitiv economists. It marked the best month for job creation since July.

The unemployment rate, meanwhile, unexpectedly dropped to 3.4%, the lowest level since 1969. 

“The surprisingly, strong across-the-board January employment report shows that labor demand remains too hot for the economy’s own good and will embolden the Fed to raise rates more not less,” said Kathy Bostjancic, the chief economist at Nationwide. “The risks are now that they might need to do more.”


Stocks fell following the better-than-expected report as the stunningly strong data dashed investor hopes that the Federal Reserve will soon pause its aggressive interest-rate hike campaign. 

Job gains were broad-based in January, with leisure and hospitality leading the way in hiring, adding 128,000 new workers. That was followed by employment in professional and business services (82,000), government (74,000), health care (58,000) and retail (30,000).

While monthly jobs data is always important, the Fed has been closely watching the reports for signs the labor market is moderating from its frenzied pace as policymakers try to wrestle inflation –  which is still running near a 40-year high – back to 2%.

A general view shows construction workers standing before the Manhattan skyline and Empire State Building, in Brooklyn on January 24, 2023. ((Photo by ED JONES/AFP via Getty Images) / Getty Images)

Fed officials have already approved eight straight increases, including four back-to-back 75-basis-point hikes, raising the federal funds rate to a range of 4.5% to 4.75%, the highest since 2007. Chairman Jerome Powell indicated at the conclusion of the Fed’s two-day meeting on Wednesday that additional rate hikes are on the tablethis year and that officials intend to leave rates elevated for “some time” to avoid a potential inflation resurgence. 


Hiking interest rates tends to create higher rates on consumer and business loans, which slows the economy by forcing employers to cut back on spending. 

Ticker Security Last Change Change %
I:DJI DOW JONES AVERAGES 34021.55 -32.39 -0.10%
I:COMP NASDAQ COMPOSITE INDEX 12145.343051 -55.47 -0.45%
SP500 S&P 500 4163.3 -16.46 -0.39%

This is a developing story. Please check back for updates.


Related Articles

Leave a Reply

Your email address will not be published. Required fields are marked *

Back to top button