US Labor Market Resilient in January, Unemployment Rate Falls
The US labor market continues to show resilience, with the unemployment rate falling to 4% in January from 4.1% in December. This marks the lowest level since May 2024.
The economy added 143,000 jobs in January, below expectations of 170,000 but higher than the revised December figure of 307,000. Notably, December's job gains were upwardly revised by 51,000, indicating a stronger labor market than previously reported.
Wage growth also remained robust, rising 4.1% year-over-year in January and 0.5% on a monthly basis, exceeding forecasts. This suggests ongoing inflation pressures in the economy.
The labor force participation rate rose to 62.6%, indicating a continued high level of labor market engagement.
Economists believe the strong labor market data supports the Federal Reserve's decision to keep interest rates unchanged for the time being. Market pricing now reflects a 67% chance of steady rates through May.
Despite some slowdown in hiring, layoffs remain low, aligning with Fed Chair Jerome Powell's description of a "broadly stable" labor market.