The jobs gain was almost double the 180,000 economists predicted, and the unemployment rate remained at 3.7 percent, according to new Labor Department data released Friday.
Wages also rose faster than inflation, up 0.6 percent to $34.55 in January, double the monthly headline inflation in December.
Annual wage growth was up
4.47 percent. Many economists think 3.5 percent annual growth is more in line with the Federal Reserve’s target of 2 percent inflation.
But strong wage and economic growth has coincided with falling inflation, which dropped to
3.4 percent in December from its 9 percent peak in June 2022.
The labor market isn’t cooling off as many economists had predicted.
“There is simply no way that 350,000 job gains in a month is consistent with a further cooling of the labor market. This elevates the risk that nominal wage growth will not fall back to levels consistent with reaching the inflation target on a sustained basis, particularly as the labor force participation rate refuses to rise any further,” Brian Coulton, Fitch Ratings economist, wrote in a Friday commentary.
Hot jobs data means Fed rate cuts will likely be pushed back to later in the year.
“The dramatic upside surprise to both jobs and wage growth means that a
March rate cut must be off the table now, and a May cut is also now potentially on ice,” Seema Shah, strategist with Principal Asset Management, wrote in an analysis.
“Certainly, with this kind of number, the six or seven rate cuts that markets had been pricing in seems very offside,” she wrote.
A spate of positive economic data has helped boost
President Biden’s economic pitch to voters as the 2024 presidential election heats up.
Former President Trump, the frontrunner for the Republican presidential nomination, has brawled with Biden over their economic records.
He also took a swing at Fed Chair Jerome Powell, accusing him of having “political” motivations for cutting interest rates in an interview recorded before the Friday jobs report with Fox Business Network’s “Mornings with Maria.”
The Hill’s Tobias Burns has more takeaways from the January jobs report here.