Employers added 517,000 jobs in January, surprisingly strong growth


The American labor market affirmed its strength in January, producing another hefty round of hiring even as interest rates continue to rise.

Employers added 517,000 jobs on a seasonally adjusted basis, the Labor Department said on Friday, an increase from 260,000 in December.

The unemployment rate was 3.4 percent, the lowest since 1969.

The robust hiring figures defied expectations and underscored the challenges facing the Federal Reserve, which is trying to cool the labor market in its effort to tame rapid inflation. By raising interest rates — on Wednesday, Fed officials did so for the eighth time in a year — policymakers hope to force businesses to pull back on their spending, including hiring.

Yet the labor market has remained extraordinarily tight. In addition to the report on Friday, the government released data this week showing that the number of posted jobs per available unemployed worker — a measure that policymakers have been watching closely — rose again in December. And despite a cavalcade of layoffs in the technology sector, the overall number of pink slips has stayed extremely low.

“The labor market is still incredibly hot,” said Beth Ann Bovino, the chief U.S. economist at S&P Global Ratings.

Still, some measures suggest that higher interest rates appear to be slowing other parts of the economy. Transactions in the housing market, which is particularly sensitive to rate increases, have plummeted as high mortgage rates make purchases too expensive for many would-be homeowners. Consumer spending fell at the end of last year, a sign that Americans were becoming more cautious in the face of rising prices, dwindling savings, and fears of recession.

Many forecasters expect the labor market to also slow this year as the Fed’s rate moves filter through the economy.

Office occupancy hit a new post-pandemic record this week, at 50.4%, according to swipe data from Kastle Systems.

 Are the offices half-full or half-empty? Some executives might see crossing the 50% milestone as a sign of a comeback. But the figure has largely plateaued since September, hinting at a new reality where people work from home a lot more.

 "[T]he genie is out of the bottle," Scott Rechler, CEO of property developer RXR, told the FT. The commercial real estate market is adjusting to this new reality of not only empty offices but higher interest rates — forcing developers to make some choices.

  • In New York City, the FT notes, some office buildings — the fancy, ultra-modern ones — will make it through this change. "Dated buildings in humdrum locations will spiral into obsolescence," the FT writes.

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