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January jobs report shocks with 517,000 jobs added, unemployment at 3.4%

Feb 03, 2023

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The unemployment rate in January just dropped to its lowest level since 1969. Meanwhile, U.S. job growth for the first month of the year surged, more than doubling expectations.

The latest numbers from the Bureau of Labor Statistics (BLS) stunned economists who expected to see a continued slowdown in growth. But the economy bucked that trend.

U.S. employers added an astounding 517,000 jobs in January, in spite of all of the tech layoffs rippling through the sector. BLS said job growth was widespread, driven by gains in leisure and hospitality, professional and business services, and health care.

The monthly growth is the highest recorded since July 2022, and is far greater than the 189,000 jobs economists expected this month. It’s also more than double the 223,000 jobs added in December.

The robust growth kicked the unemployment rate down to 3.4% in January. The last time the unemployment rate reached 3.4% was in May 1969. The rate fell from December’s 3.5%, while economists had expected unemployment to climb to 3.6%.

The surprise jobs report points to an increasingly resilient job market in the face of Federal Reserve rate hikes. On Wednesday, the Fed raised its lending rate for the eighth time in less than a year, this time by 25 basis points, to a target range of 4.5% to 4.75%. That’s the highest level for the fed funds target rate since 2007.

While some conflicting reports have indicated job growth may not be as strong as the BLS reports suggest, revisions published by the BLS on Friday show job growth was actually stronger in 2022 than initial reports.

The Philadelphia Federal Reserve Bank previously reported that it believed the BLS overestimated job growth by more than a million in the second quarter of 2022, but the BLS revisions show it revising job growth down by only 59,000 jobs. Instead of adding 1,047,000 jobs in the second quarter, the latest revisions show the U.S. economy added 988,000 jobs.

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