The U.S. economy added 353,000 jobs in January, an explosive increase heading into the start of 2024.
January's unexpected job growth exceeded economists' expectations. Last month's forecast was for an increase of 176,500 people, according to FactSet.
It's the latest sign of the economy's continued ability to fend off the highest interest rates in 20 years.
The unemployment rate also remained at 3.7%, contrary to expectations that it would rise to 3.8%, according to Bureau of Labor Statistics data released Friday. This means the unemployment rate has remained below 4% for 24 consecutive months, the longest period in the country since the 1960s.
This is despite headlines in recent weeks dominated by high-profile layoffs at tech companies Microsoft and PayPal and delivery company UPS, among others.
![U.S. economy added 353,000 jobs in January, defying economists' expectations](https://i.dailymail.co.uk/1s/2024/02/02/14/80778649-13038041-image-a-20_1706885351732.jpg)
U.S. economy added 353,000 jobs in January, defying economists' expectations
The benchmark S&P 500 and tech-heavy Nasdaq opened higher on Friday as investors cheered a strong jobs report and strong quarterly reports from Meta and Amazon Inc. the previous day.
While the report shows the strength and solidity of the U.S. economy, it also raises questions about how quickly the Federal Reserve will start cutting interest rates.
Despite rising borrowing costs over the past year, a strong job market has supported consumer spending and, in turn, economic growth. A strong start to the year suggests the labor market will continue to support the economy.
The January jobs report comes as economists and policymakers are closely monitoring the fate of the economy in the face of possible interest rate cuts this year.
![The unemployment rate also remained at 3.7 percent, according to Bureau of Labor Statistics data released Friday.](https://i.dailymail.co.uk/1s/2024/02/02/14/80778645-13038041-image-a-27_1706885482536.jpg)
The unemployment rate also remained at 3.7 percent, according to Bureau of Labor Statistics data released Friday.
Federal Reserve Chairman Jerome Powell said at his latest meeting on Wednesday that he was encouraged by the downward trend in the economy and inflation, but warned there was still “a ways to go.”
The Fed decided to keep interest rates on hold for the fourth consecutive meeting, keeping the benchmark borrowing rate at 5.25% to 5.5%.
Chairman Powell also ruled out an anticipated rate cut in March.
Wall Street appears to have given up on the possibility of a rate cut next month after the latest jobs report.
About a month ago, interest rate traders expected a 75% chance of a rate cut from the Fed in March, but as of Friday morning, that probability had fallen below 20%, according to the CME FedWatch tool.
![Officials confirmed at Wednesday's meeting that interest rates would remain at current levels of 5.25-5.5%.](https://i.dailymail.co.uk/1s/2024/02/02/14/80696705-13038041-Officials_confirmed_interest_rates_will_remain_at_their_current_-a-18_1706883866704.jpg)
Officials confirmed at Wednesday's meeting that interest rates would remain at current levels of 5.25-5.5%.
![At Wednesday's latest meeting, Federal Reserve Chairman Jerome Powell said he was encouraged about the economy but cautioned there was still](https://i.dailymail.co.uk/1s/2024/02/02/14/80778709-13038041-image-a-19_1706885305398.jpg)
At Wednesday's latest meeting, Federal Reserve Chairman Jerome Powell said he was encouraged about the economy but cautioned there was still “some way to go.”
Wages also rose at an unexpectedly high rate in January.
Average hourly wages rose significantly by 0.6% from December and by 4.5% from January 2023.
The Department of Labor said professional and business services, along with health care and retail, saw job growth.
However, it added that employment had declined not only in the oil and gas extraction industry, but also in sectors such as mining.
George Mateyo, chief investment officer at Key Private Bank, told CNBC: “Don't get me wrong, this is an explosive jobs report and the Fed's recent stance, which has effectively ruled out a rate cut in March. It justifies it,” he said.
“Furthermore, strong employment growth and better-than-expected wage growth could signal a further delay in rate cuts in 2024, causing some market participants to recalibrate their thinking. .”
“If the primary labor market story of 2023 was slow and steady easing, 2024 has started fast and furious,” said Nick Bunker, director of economic research at Indeed.
“January gains were also broad-based, with nearly two-thirds (65.6%) of industries adding jobs or remaining flat in January, the highest level since January 2023. Ta”
“But while the headline data contains plenty of great signs for job seekers and workers, some indicators are at least flashing yellow. Still, this is a great start heading into 2024. is definitely a strong foundation to build on over the year.”
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