US job growth unexpectedly jumps in January as economy adds 353,000 new positions

U.S. job growth unexpectedly surged in January, underscoring the resilience of the labor market even in the face of high interest rates and stubborn inflation.

Employers added 353,000 jobs in January, the Labor Department said in its monthly payroll report released Friday, easily topping the 180,000 gain forecast by Refinitiv economists. The unemployment rate held steady at 3.7%, against expectations for a slight increase.

Wage growth also accelerated last month, with average hourly earnings – a key measure of inflation – rising 0.6%, double what economists expected. On an annual basis, wages rose 4.5% in January.

The surprisingly strong report paints a picture of a job market that has gone largely unscathed despite the Federal Reserve’s aggressive interest-rate hike campaign, but it also diminishes the odds of an imminent rate cut.

“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,” said Seema Shah, chief global strategist at Principal Asset Management. “Certainly, with this kind of number, the six or seven rate cuts that markets had been pricing in seems very offside.”

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