The US labor market boomed in hiring in January, setting off another wave of strong job growth even as interest rates continued to rise.
Employer added 517,000 jobs on a seasonally adjusted basis, the Labor Department said on Friday, up from 260,000 in December.
Underscoring the extraordinary vitality of the labor market is the drop in the unemployment rate to 3.4%, the lowest level since 1969.
Even as businesses across the country recruited with unexpected enthusiasm, wage growth slowed slightly to 0.3% from December, a sign of some attraction pressure. employees by increasing wages can be reduced.
The huge hiring numbers, however, defied expectations and underscored the challenges facing the Federal Reserve, which is trying to cool the labor market in an attempt to tame rapid inflation. fast. By raising interest rates — on Wednesday, Fed officials have done so for the eighth time in a year – policymakers hope to force businesses to cut spending, including hiring.
However, the labor market remains extremely tight. In addition to Friday’s report, the government released data this week showing number of jobs posted per available unemployed worker — a measure that policymakers have closely watched — rebounded in December. And despite a flurry of layoffs in the tech sector, the total number of pink slips remained extreme. low period.
“A lot of work has to be done,” said Beth Ann Bovino, chief US economist at S&P Global Ratings. “We certainly didn’t see it in this report.“
Job growth was broad, including in a number of industries that economists expect to show signs of slowing. Employers in the leisure and hospitality sectors, including restaurants and bars, have attracted a large number of workers.
The labor force participation rate was unchanged at 62.4%. Fed officials had hoped to see an increase in the ranks of those willing to work, which could ease the tightening in the labor market that is boosting wages and contributing to inflation.
The information sector lost 5,000 jobs, a relative bump despite headline-grabbing news of layoffs at tech giants like Microsoft and Google.
At the same time, some measures suggest higher interest rates appear to be slowing down other parts of the economy. Transactions in real estate marketis particularly sensitive to rate hikes, which fell sharply last year as relatively high mortgage rates made buying a home too expensive for many who would be homeowners. Consumer spending declines late last year, a sign that Americans are becoming more wary of rising prices, dwindling savings and recession fears.
Many forecasters think the labor market will also slow this year as Fed interest rates filter through the economy.
