US Economy Adds 353,000 Payrolls In January: Monster Job Growth Well Above Expectations, Destroys Fed Rate Cut Bets

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The U.S. labor market showed surprising strength in January, adding far more jobs than economists anticipated and revealing a significant increase in wage growth.

The jobs report, published Friday by the Bureau of Labor Statistics, includes the following data:

  • Non-farm payrolls increased by 353,000 in January, a jump from the upwardly revised figure of 333,000 for December and well above the expected 180,000. It's the largest monthly job gain since January 2023.
  • In January, the healthcare sector saw an increase of 70,000 jobs, including growth in ambulatory healthcare services (+33,000), hospitals (+20,000), and nursing and residential care facilities (+17,000).
  • The unemployment rate remained steady at 3.7%, below the expected 3.8%.
  • Average hourly earnings showed 0.6% growth for the month, a sharp increase from the previous 0.4% and below the predicted 0.3%.
  • On an annual basis, wage growth increase to 4.5%, which was above both the prior 4.4% and expected rate of 4.1%.
Prior to the release of the jobs report, the market had assigned a 65% probability of no change in interest rates in March, in line with the forward guidance provided by Fed Chair Jerome Powell. Speculators are factoring in six consecutive rate cuts from May to December 2024.

Market Reactions

Treasury yields rose after the release of the January's jobs report. The 10-year yield rose 9 basis points to 3.94%, while the policy-sensitive two-year yield rose by 14 basis points to 4.35%.

Futures linked to major U.S. stock averages backed off from an upward trend in premarket trading on Friday. Contracts tied to the S&P 500 were up by 0.2% as of 8:35 a.m. in New York, while those linked to the Nasdaq 100 rose by 0.2%.

The majority of premarket gains were driven by major tech companies, with Meta Platforms Inc. (NASDAQ: META) surging over 16% and Amazon.com Inc. (NASDAQ: AMZN) rising by 7% due to stronger-than-expected quarterly earnings and guidance.