The American labor market unleashed a burst of hiring in January, producing another wave of robust job growth even as interest rates continue to rise.
Employers added 517,000 jobs on a seasonally adjusted basis, the Labor Department said on Friday, an increase from 260,000 in December.
Underscoring the labor market’s extraordinary vibrancy was the unemployment rate, which fell to 3.4 percent, the lowest since 1969.
Even as businesses across the country hired with unexpected zeal, wage growth slowed slightly to 0.3 percent compared with December, an indication that some of the pressure to lure employees with pay raises may be easing.
Still, the hefty hiring figures defied expectations and underscored the challenges facing the Federal Reserve, which is trying to cool the labor market in its effort to tame rapid inflation. By raising interest rates — on Wednesday, Fed officials did so for the eighth time in a year — policymakers hope to force businesses to pull back on their spending, including hiring.
Yet the labor market has remained extraordinarily tight. In addition to the report on Friday, the government released data this week showing that the number of posted jobs per available unemployed worker — a measure that policymakers have been watching closely — rose again in December. And despite a cavalcade of layoffs in the technology sector, the overall number of pink slips has stayed extremely low.
“So much for moderation,” said Beth Ann Bovino, the chief U.S. economist at S&P Global Ratings. “We certainly didn’t see it in this report.”
The job growth was broad, including in some industries that economists had expected to show signs of slowing. Employers in leisure and hospitality, including restaurants and bars, brought on a bevy of workers.
The monthly jobs report is based on two surveys, one of households and one of employers.
The labor force participation rate was barely changed at 62.4 percent. Fed officials have been hoping to see an increase in the ranks of those available to work, which could alleviate the tightness in the labor market that is driving up wages and contributing to inflation.
The information sector lost 5,000 jobs, a relative blip despite headline-grabbing news of layoffs at technology giants such as Microsoft and Google.
At the same time, some measures suggest that higher interest rates appear to be slowing other parts of the economy. Transactions in the housing market, which is particularly sensitive to rate increases, plummeted last year as relatively high mortgage rates made purchases too expensive for many would-be homeowners. Consumer spending fell at the end of last year, a sign that Americans were becoming more cautious in the face of rising prices, dwindling savings and fears of recession.
Many forecasters expect the labor market to also slow this year as the Fed’s rate moves filter through the economy.
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