Unexpectedly strong numbers from the monthly employment report will likely strengthen the Federal Reserve Open Market Committee’s resolve to continue raising rates. David Harrison reports on the employment numbers for The Wall Street Journal:
U.S. job growth accelerated at the start of the year as employers added a robust 517,000 jobs and pushed the unemployment rate to a 53-year low.
The unexpectedly strong hiring gains raise questions about whether the economy, which had been losing momentum over the past several months, is starting to pick up steam again. If so, that could prompt a more aggressive response by the Federal Reserve as it raises interest rates in an attempt to temper economic growth and bring down inflation.
January’s seasonally adjusted payroll gains were the largest since July 2022 and snapped a string of five straight months of slowing employment growth, the Labor Department said Friday. December job growth was also stronger than previously estimated, pushing the average job gains for the last three months to 356,000, well above the 2019 prepandemic average of 163,000.
The unemployment rate was 3.4% last month, its lowest level since May 1969. The average workweek rose to its highest level since March 2022, reversing declines in the fourth quarter.
Wage growth continued to soften, despite the strong job gains. Average hourly earnings grew 4.4% in January from a year earlier, down from a revised 4.8% in December. Annual revisions to employment and pay data suggest that wage growth has been cooling—but at a slower pace than previously thought.
Stocks closed lower on Friday after the jobs report beat economists’ expectations. Bond yields rose.
The Fed is likely on track to raise interest rates by another quarter-percentage point at its March meeting and to signal another increase is likely after that. But signs the labor market remains resilient could lead to more difficult debates at coming meetings over whether the central bank has done enough to neutralize inflation.
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