The US added 517,000 jobs in January, starting the year with surprisingly strong job creation.
January's job growth far surpasses the forecast of 185,000 jobs added.
The US unemployment rate in January was 3.4%, below the 3.6% estimate.
The US started the year with a shockingly strong labor market.
The US added 517,000 jobs in January, according to nonfarm payrolls data from the Bureau of Labor Statistics. That was far above the forecast of 185,000 jobs added from economists surveyed by Bloomberg.
Additionally, the US unemployment rate was 3.4% in January, below the 3.6% economists forecasted. The 3.4% unemployment rate marks an over-50-year low, having last been at that level in May 1969.
"The job market is off to the races in 2023," Daniel Zhao, lead economist at Glassdoor, told Insider. "It's nice to see that after a 2022 that was marked by a surprisingly resilient job market. We are getting an echo of that in the first report of 2023."
According to Nick Bunker, head of economic research at the Indeed Hiring Lab, the labor market has "tremendous" strength. But the question is what the Fed will do next.
"So I think we're starting 2023 with a boom and really it's a question of is this sustainable fundamentally, and also will the Federal Reserve allow it to be sustainable?" Bunker said.
Job growth in December was revised from 223,000 to 260,000. November's job creation was also revised from 256,000 in the last news release in January to 290,000 in Friday's report. Friday's news release came with revisions because of the annual benchmark process, "updated seasonal adjustment factors," and industry changes.
"Revisions due to both the NAICS 2022 conversion and the benchmark process will affect more historical data than is typical in the annual benchmark process," a news release from the Bureau of Labor Statistics last month noted.
Overall, revisions to monthly growth in 2022 meant 311,000 more jobs were added last year than previously reported.
Information and utilities sectors both saw small declines in employment from December to January. Other industries added jobs.
"Job growth was widespread, led by gains in leisure and hospitality, professional and business services, and health care," Friday's news release stated.
Employment in leisure and hospitality rose by 128,000 in January, higher than the 64,000 job creation in December. The industry is still below its February 2020 employment level.
Professional and business services continued to see employment grow, adding 82,000 jobs in January.
Some sectors are still rapidly growing and poised to continue to do so. Food services and drinking places added 98,600 jobs in January.
Bunker said "that's part of the strengths of this labor market recovery — there are those in-person services, they got hit so hard during the pandemic" but they are continuing to rebound.
"And there's still lots of employer demand there," he added. "So I think that that is notable to me, but it's been notable for quite some time."
Additionally, average hourly earnings climbed 4.4% in January from a year ago in January 2021. That means this growth is showing signs of slowing based on year-over-year changes. However, hourly earnings did climb 0.3% from December to January, with earnings now at $33.03.
While wage growth remains relatively high, it has subsided in recent months.
"I think in combination with all the other data we've seen, this does suggest that there's continued moderation in wage growth, which is a sign, at least of one margin, of the labor market cooling down and an important one," Bunker said, adding that this is important for inflationary outlook.
In addition to the job creation data on Friday, data out Wednesday from the Bureau of Labor Statistics also showed how the US job market closed out 2022. Openings soared in the last month of the year to 11.0 million, an increase of over 500,000 openings from November's level.
The US saw its openings per unemployed person ratio climb from 1.7 in both October and November to 1.9 in December. 2022 was a series high in the number of quits with annual results start in 2001.
"More than 50 million Americans quit their jobs in 2022, compared to just 40 million in 2018 and 42 million in 2019," Julia Pollak, chief economist at ZipRecruiter, said. "Rather than petering out, the Great Resignation remained in full swing throughout the year."
"Although the pace of job gains has slowed over the course of the past year and nominal wage growth has shown some signs of easing, the labor market continues to be out of balance," Powell said.
Read the original article on Business Insider