U.S. added 517,000 jobs in January, unemployment reaches 53-year low

With nonfarm payrolls reporting their largest growth since July 2022, the employment picture got off to a robust start in 2023.

In January, nonfarm payrolls climbed by 517,000, exceeding both the Dow Jones projection of 187,000 and the gain of 260,000 in December.

Compared to the estimated 3.6%, the unemployment rate dropped to 3.4%. Since May 1969, that is the lowest level of unemployment. To 62.4%, the labor force participation rate increased little. An additional measure of unemployment that takes into account disenchanted workers and people who hold part-time jobs out of necessity increased to 6.6%.

According to Julia Pollak, chief economist at ZipRecruiter, “Today’s jobs news is almost too good to be true.” Adding “lowering inflation combined with falling unemployment is the stuff of economics fiction. Like $20 notes on the pavement and free lunches.”

But after the report, markets declined, with the Dow Jones Industrial Average falling by nearly 100 points in early trading.

Leisure and hospitality added the most employment overall with 128,000. Professional and business services (82,000), government (74,000), and health care were other big gainers (58,000). Construction added 25,000 and retail increased by $30,000.

Additionally, wages showed strong rises for the month. Average hourly wages rose by 0.3%, in line with predictions, and 4.4% from a year earlier, above expectations by 0.1 percentage points but falling short of December’s gain of 4.6%.

The labor market’s resiliency may lead some economists to reevaluate their expectations for at least a modest recession this year.

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