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The U.S. economy added an estimated 353,000 new jobs in January, but the surprisingly large gain may have been flattered by the adjustments the government makes to smooth out seasonal swings in employment.
The increase in employment last month easily beat forecasts. Economists polled by The Wall Street Journal had forecast a 185,000 increase in new jobs.
The unemployment rate, meanwhile, stayed at 3.7% in January. It's near the lowest level since the 1960s.
A quick look at the numbers:
U.S. economy adds 353,000 new jobs in January well above 185,000 Wall Street forecast
U.S. unemployment rate stays at 3.7% in January
U.S. hourly wages climb a sharp 0.6% in January
Increase in hourly wages in the past year climbs to 4.5% from 4.3%
U.S. job gains in December increased to 333,000 from 216,000
U.S. job gains in November revised up to 182,000 from 173,000
The knee-jerk reaction in markets is that these numbers are too strong. Stock futures that were buoyed by big-tech results have pared their advance, and the Dow contract is actually negative.
It's not just that the economy added 353,000 new jobs in January, but December was upwardly revised, to show 333,000 jobs. In all, employment in November and December was upwardly revised by 126,000.
There’s clearly some softening in today’s data -- the dip in hours worked, the revisions and other seasonal factors will need to be parsed. But given the broad expectations for a much slower economy this year, these numbers give pause for thought at the very least.
Treasury yields are shooting higher. This looks more like no landing than a soft one.
Looks like there’s ongoing strength in the healthcare sector, where jobs rose by 70,000 -- that compares to an average monthly increase of 50,000 in 2023.
There was a slight drop in the labor force, not encouraging. The participation rate held at 62.5%, still below the level as recently as November, when it was 62.8%.
Note, though, that the household survey showed another decline in employment. The drop was 31,000, after a huge 683,000 tumble in December. So these two series are really saying different things about job creation.
How’s this for context: The BLS says payroll employment increased by an average of 255,000 a month in 2023.
Despite the surprise strength in payrolls and the participation rate remaining firm, weekly hours ticked down to the lowest since March 2020. When employers reduce hours, it’s usually a sign of less demand, so it stands out.
Even if the job gains in January are exaggerated, the surge in hiring in December - or all of 2023 for that matter - can't be overlooked.
When the government said 216,000 new jobs were created in December, some economists were very doubtful. All signs pointed to a slowdown in hiring and a softening labor market toward the end of the year as higher interest rates began to bite.
Well, it turns out employment growth in December was pretty darned strong. Based on new information, the government said 333,000 new jobs were created in December.
That's not all. The U.S. added a gargantuan 3 million jobs in 2023.
That's the largest increase in hiring since 1999 if the pandemic recovery years of 2021 and 2022 are ignored.
It wasn't supposed to happen. But it did.
JUST IN: Another blowout jobs gain! The US economy added 353,000 jobs in January, far exceeding expectations.
— Bloomberg Opinion (@opinion) February 2, 2024
📈 Tune in as @JonathanJLevin joins @DataTrekMB for live analysis https://t.co/4XVANtfwxN
BREAKING: The U.S. economy added 353,000 jobs in January, much better than expected. More here: https://t.co/xqVSU6PKbn pic.twitter.com/7W5NmDYudL
— CNBC (@CNBC) February 2, 2024
January jobs report: US economy added 353,000 in January, coming in much hotter than expected. pic.twitter.com/a6Xlax8lro
— Yahoo Finance (@YahooFinance) February 2, 2024
January jobs report: US economy 353K jobs, blowing past Wall Street expectations https://t.co/siYTGTMxBx
— Yahoo Finance (@YahooFinance) February 2, 2024
⚫️ Nonfarm payrolls: +353K vs +185K expected
⚫️ Unemployment rate: 3.7% vs 3.8% expected