U.S. Economy Adds 353,000 Jobs in January

(Image courtesy of BLS)

Total nonfarm payroll employment rose by 353,000 in January, with the unemployment rate flat at 3.7%, the Bureau of Labor Statistics reported Feb. 2.

Job gains occurred in professional and business services, health care, retail trade and social assistance, with employment declining in mining, quarrying and the oil and gas extraction industry.

Additionally, the change in total nonfarm payroll employment for November was revised up by 9,000, from 173,000 to 182,000, and the change for December was revised up by 117,000, from 216,000 to 333,000.

“The labor force participation rate was unchanged at 62.8% and remains below its pre-pandemic level. Average hourly earnings increased by 4.5% year over year and 0.6% month over month, an increase from December’s 0.3%,” observed First American Economist Ksenia Potapov.

“There are signs that the labor market is cooling, which is why consensus forecasts expected a more modest employment gain of 180,000 this month. Openings, hires and quits have been getting back into balance and, in some cases, declining below their pre-pandemic levels,” she continued.

“These trends align with the Q4 GDP report, which showed more momentum in the economy at the end of the year and now into January. However, they contradict the declining trend in job opening and hiring rates. And this news certainly runs contrary to the string of layoff announcements at many companies in recent weeks,” said Mortgage Bankers Association SVP and Chief Economist Mike Fratantoni.

He also weighed in on the recent report’s impact on the Fed, noting a single data point shouldn’t change the direction of policy.

“However, we expect that the balance of incoming data will keep the Federal Reserve from cutting rates in March, and still anticipate that they will wait until the May meeting for a first cut,” Fratantoni continued. “This certainly will depend on continuing declines in inflation between now and then.”