The U.S. economy added significantly more jobs than expected during the first month of the year. Jobs increased by 353,000 in January, up from a revised rate of 333,000 in December, according to data released by the Bureau of Labor Statistics on Friday. January’s reading far exceeded the monthly average of 255,000 new jobs per month in 2023.
Meanwhile, the national unemployment rate remained unchanged for the third month in a row at 3.7% while the number of unemployed Americans also showed little change at 6.1 million.
Job gains occurred mainly in professional and business services, health care, retail trade, and social assistance. The mining, quarrying, and oil and gas extraction industries posted fewer jobs.
During his press conference at the Federal Open Market Committee meeting on Wednesday, Federal Reserve Chair Jerome Powell described the labor market as “strong” after the rate-setting body voted to leave its benchmark federal funds rate unchanged. This month’s surprisingly strong employment report will likely delay any interest rate cuts by the Fed and push them back to May, according to economists.
Strong consumer demand and pandemic-induced savings had been helping the labor market weather higher rates. But consumers are now saving less and continue to spend.
“While job growth in January seems to suggest the economy will continue to grow quickly, the picture could begin to shift as more people have to rethink their spending habits,” Bright MLS chief economist Lisa Sturtevant said in a statement.
Average hourly earnings for private-sector employees grew by 0.6% month over month to $34.55 and were up 4.5% from a year ago. In December, job openings posted a small gain to 9.0 million, compared to 8.9 million in November.
“The strong job market is good news for the spring buying season as higher household incomes are a necessary component, but it also means that mortgage rates are not likely to drop much further at this point,” Mortgage Bankers Association senior vice president and chief economist Mike Fratantoni said in a statement.