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A view of New York City, United States, January 27, 2023. /CFP
U.S. job growth accelerated sharply in January while the unemployment rate hit a 53-year low of 3.4 percent, pointing to a stubbornly tight labor market, and a potential headache for Federal Reserve officials as they fight inflation.
The survey of establishments showed nonfarm payrolls surged by 517,000 jobs last month, the most in six months. Economists in a Reuters poll had expected a gain of 185,000. Data for December was revised higher to show 260,000 jobs added instead of the previously reported 223,000. Employment growth last month was well above the monthly average of 401,000 in 2022.
The strength in hiring, which occurred despite layoffs in the technology sector as well as in sectors like housing and finance that are sensitive to interest rates, poured cold water on market expectations that the U.S. central bank was close to pausing its monetary policy tightening cycle.
Economists said the head-scratching report and other data on Friday showing a sharp rebound in services industry activity last month suggested the Fed could lift its target interest rate above the recently projected 5.1 percent peak and keep it there for some time.
"The labor market is still running hot, too hot for the Fed's liking," said Daniel Vernazza, chief international economist at UniCredit Bank in London. "Anyone that thought the Fed might stop hiking as soon as its March meeting is likely to be disappointed on this evidence."
(Source: Reuters with edits)
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Disinformation report hotline: 010-85061466