The numbers: The number of new jobs created in January rose by 517,000 to mark the biggest increase in six months, suggesting little erosion in a dynamic U.S. labor market even as the economy weakens.
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.
What’s more, employment grew even faster in the waning months of 2022 than previously reported.
The unemployment rate, meanwhile, slid to a 54-year low of 3.4% from 3.5%, the government said Friday. That’s the lowest level since 1969.
Hourly pay rose a modest 0.3% for the second month in a row, reflecting the smallest back-to-back gains in almost two years.
The increase in pay over the past year also slowed again to 4.4% from 4.6%, indicating some relaxation in wage pressures. The Federal Reserve has been worried that rapidly rising wages could make it harder to bring down high inflation.
U.S. stocks
DJIA,
SPX,
fell in premarket trades and bond yields rose after the report.
Economists polled by The Wall Street Journal had forecast an 187,000 increase in new jobs last month.
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
AMZN,
IBM
IBM,
and Fedex
FDX,
have announced layoffs and more job cuts are expected.
Yet the economy 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:Â The Dow Jones Industrial Average DJIA and S&P 500 SPX were set to open lower in Friday trades.
Credit: marketwatch.com