The U.S. job growth rapidly ramped up significantly in January, while the unemployment rate reached the lowest level in 53 and a half year of 3.4%, indicating a tight labour market, which could cause a shift in perspective for the Federal Reserve officials as they deal with high inflation.
On Friday, the Labor Department kept a close watch on the employment report that showed last year’s job creation was stronger than expected. It means that the economy did not trend into recession, although wage inflation cooled in January. The average hourly earnings increased more quickly in 2022 than previously expected.
Although there were layoffs in the technology sector and other sectors like housing and finance that were sensitive to interest rates, employment remains strong.
The economist suggested that the Fed could raise the target interest rate to exceed the recently forecasted 5.1% peak and keep it there for a while.
Surveys showed that nonfarm payroll employment rose by 517,000 jobs last month, the most hired in six months. Economists in a Reuters poll had expected 185,000 jobs. The data for December was adjusted to be higher at 260,000 jobs instead of the last report of 223,000 jobs.
Last month, employment rose above the monthly average of 401,000 jobs in 2022.
The employment of leisure and hospitality stands at 495,000 jobs, which was still lower than pre-pandemic level, while the professional and business service hire increased by 82,000 jobs, with temporary help jobs.