2023.02.0313:21:00UTC+00U.S. Job Growth Far Exceeds Expectations In January, Unemployment Rate Drops To 53-Year Low

Job growth in the U.S. unexpectedly showed a substantial acceleration in the month of January, according to a closely watched report released by the Labor Department on Friday.

The Labor Department said non-farm payroll employment soared by 517,000 jobs in January after surging by an upwardly revised 260,000 jobs in December.

Economists had expected employment to climb by 185,000 jobs compared to the addition of 223,000 jobs originally reported for the previous month.

"The robust 517,000 gain in non-farm payrolls in January means that, despite most leading indicators of recession flashing red, the economy is clearly not as close to recession as we had suspected," said Andrew Hunter, Senior U.S. Economist at Capital Economics.

The much bigger than expected increase in employment reflected widespread job growth, led by gains in leisure and hospitality, professional and business services, and healthcare.

The Labor Department noted government employment also increased, partially reflecting University of California workers returning from a strike.

The report also said the unemployment rate edged down to 3.4 percent in January from 3.5 percent in December. The dip surprised economists, who had expected the unemployment rate to inch up to 3.6 percent.

With the unexpected decrease, the unemployment rate dropped to its lowest level since hitting a matching rate in May 1969.

Meanwhile, the Labor Department said average hourly earnings rose $0.10 or 0.3 percent to $33.03 in January. The annual rate of wage growth still slowed to 4.4 percent in January from 4.9 percent in December.

Citing the slower wage growth, Hunter said, "Although the report at face value supports the Fed's plans to hike interest rates twice more over the next few months, it underlines our belief that core inflation can continue to fall sharply even without a significant weakening in labor market conditions."