Despite waves of layoffs hitting some of the nation’s largest employers, the unemployment rate unexpectedly fell, and the labor market added back more jobs than expected in January—adding to signs the economy may not be slowing down enough enough for the Federal Reserve to back away from its aggressive campaign to tame rising prices.
Total employment increased by 517,000 in January—significantly more than the 187,000 new jobs economists were expecting, according to data released Friday by the Labor Department.
Despite growing announcements of corporate layoffs last month, the unemployment rate fell to 3.4%—coming in below expectations for it to tick up to 3.6% and instead hitting the lowest level since 1969.
“While we have seen many reported layoffs in the tech industry, there are other segments that are continuing to thrive,” Bill Armstrong, president of recruiting at Safeguard Global, said in an email Friday, pointing out the healthcare and hospitality industries are particularly healthy, adding 58,000 and 128,000 jobs in January, respectively.
Job growth in January was also fairly widespread, with employment also increasing in the government, and professional and business services.
Despite the robust gains elsewhere in the report, wages grew by about 10 cents, or 0.3%, to $33.03 in January, falling in line with economist expectations.
The report comes two days after additional data signaling the labor market remains tight, with job openings in December surpassing 11 million for the first time since July and payroll processor ADP reporting that hiring remained strong in January despite weather-related disruptions stunting growth.
The Fed’s interest rate hikes—and central bank tightening around the world—have triggered steep downturns in the housing and stock markets, and a growing number of experts worry the weakness could ultimately spark a deep global recession. However, the labor market has remained surprisingly strong even amid signs the turmoil could be spreading into the job market, with tech giants Alphabet, Amazon and Microsoft among corporations announcing steep job cuts in recent weeks. Oanda analyst Edward Moya expects the layoff theme will spread across other sectors throughout the year, but the exact timing remains very unclear.
“The quality of jobs available to American workers has declined,” Comerica Bank chief economist Bill Adams explains of the fragmented labor market, noting technology, finance and manufacturing firms are laying off workers, while lower-paying industries like leisure and hospitality continue to add jobs.
The labor market added 4.8 million jobs in 2022—the second-best showing since 1940 after 2021, according to Glassdoor’s Lead Economist Daniel Zhao
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The U.S. labor market ended 2019 with a bang as employment rose by a substantial 517,000 jobs in January, pushing the unemployment rate down to its lowest level in 56 years, according to the Bureau of Labor Statistics (BLS).
This marks the 114th straight month of job gains and continues to illustrate a strong and steady economic recovery from the 2008 global financial crisis. According to the BLS, the unemployment rate for January fell to 3.4%, the lowest it has been since 1969. “The continuing trend of job growth reflects an economy that remains robust and continues to create jobs for workers across all skill levels,” said U.S. Labor Secretary Eugene Scalia in a statement.
Breaking down the sectors of job growth, professional and business services added some of the largest numbers in January, adding 67,000 positions. Educational and health services, transportation and warehousing, and leisure and hospitality sectors also experienced notable gains. In an encouraging sign of moving forward, the manufacturing sector added another 13,000 jobs, which marks the 15th consecutive month of employment additions in the sector.
In addition, January saw a modest uptick in wages, with the average hourly earnings increasing by 8 cents to $28.44. Over the past 12 months, average hourly earnings have grown by 3.1%, up slightly from 2.9% growth in December.
Overall, the January job numbers show positive signs of growth and stability that should continue as the year progresses. With the unemployment rate at a historic low and wage growth modestly increasing, these numbers indicate a strong foundation for the economy in 2020.