Despite waves of layoffs hitting some of the nation’s largest employers, the unemployment rate unexpectedly fell, and the labor market added back more jobs than expected in January—adding to signs the economy may not be slowing down enough enough for the Federal Reserve to back away from its aggressive campaign to tame rising prices.
Total employment increased by 517,000 in January—significantly more than the 187,000 new jobs economists were expecting, according to data released Friday by the Labor Department.
Despite growing announcements of corporate layoffs last month, the unemployment rate fell to 3.4%—coming in below expectations for it to tick up to 3.6% and instead hitting the lowest level since 1969.
“While we have seen many reported layoffs in the tech industry, there are other segments that are continuing to thrive,” Bill Armstrong, president of recruiting at Safeguard Global, said in an email Friday, pointing out the healthcare and hospitality industries are particularly healthy, adding 58,000 and 128,000 jobs in January, respectively.
Job growth in January was also fairly widespread, with employment also increasing in the government, and professional and business services.
Despite the robust gains elsewhere in the report, wages grew by about 10 cents, or 0.3%, to $33.03 in January, falling in line with economist expectations.
The report comes two days after additional data signaling the labor market remains tight, with job openings in December surpassing 11 million for the first time since July and payroll processor ADP reporting that hiring remained strong in January despite weather-related disruptions stunting growth.
The Fed’s interest rate hikes—and central bank tightening around the world—have triggered steep downturns in the housing and stock markets, and a growing number of experts worry the weakness could ultimately spark a deep global recession. However, the labor market has remained surprisingly strong even amid signs the turmoil could be spreading into the job market, with tech giants Alphabet, Amazon and Microsoft among corporations announcing steep job cuts in recent weeks. Oanda analyst Edward Moya expects the layoff theme will spread across other sectors throughout the year, but the exact timing remains very unclear.
“The quality of jobs available to American workers has declined,” Comerica Bank chief economist Bill Adams explains of the fragmented labor market, noting technology, finance and manufacturing firms are laying off workers, while lower-paying industries like leisure and hospitality continue to add jobs.
The labor market added 4.8 million jobs in 2022—the second-best showing since 1940 after 2021, according to Glassdoor’s Lead Economist Daniel Zhao