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The US economy added 353,000 jobs in January, starting off 2024 with a bang

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Originally Published: 02 FEB 24 05:00 ET

Updated: 02 FEB 24 10:07 ET

By Alicia Wallace, CNN

New York (CNN) — The US economy added a stunning 353,000 jobs last month, according to Bureau of Labor Statistics data released Friday, registering a stronger-than expected gain to kick off 2024.

The unemployment rate remained at 3.7% from the month before. It’s the 24th consecutive month that the nation’s jobless rate has been under 4%.

“The fact that the unemployment rate has been below 4% for 24 months straight for the first time since 1967 is truly remarkable,” Joe Brusuelas, chief economist and principal at RSM US, told CNN Business. “And that’s the word I keep saying as I look through this report: ‘This is remarkable.’ ‘Remarkable,’ is the takeaway here.”

More than a year ago, it seemed all but certain that the labor market would feel the effects of — and potentially be reeling from — the Federal Reserve’s aggressive rate-hiking campaign. But 11 hikes and four pauses later, the US job market is registering one of the longest periods of expansion this century.

January’s job gains dashed market expectations for a Fed rate cut to come sooner than later, perhaps as early as March, and for the central bank to cut as many as six times in 2024. Investors’ probability for a March rate cut dropped from 38% to under 20% on Friday, according to the CME FedWatch Tool.

However, the stronger-than-expected tally should not knock the Fed off its current path, with officials having telegraphed a trio of rate cuts to occur this year, Brusuelas said.

“The Fed’s going to have to manage expectations very carefully here going forward,” he said. Powell signaled that the central bank wants to cut — and now “It’s just matter of not if, but when.”

An upside surprise

Most industries added jobs last month, with health care and social assistance posting the largest gains of 100,400, according to the BLS.

Hiring accelerated from December, which had far stronger employment growth than previously estimated. December’s job gains were revised higher by 117,000 positions to total 333,000 for the month. November was revised up as well, but only by 9,000 jobs, to a 182,000 net job gain.

January’s gains blew economists’ expectations out of the water: Consensus forecasts had called for a net gain of 176,500 jobs last month, according to FactSet.

Still, economists have cautioned that the January report is among the trickiest to forecast because it’s typically a big month for job losses (with seasonal workers being let go after the holidays and other businesses doing some new year’s belt-tightening). Additionally, the BLS applies new seasonal adjustment factors at the start of the year to help smooth out the data and better understand the trends.

For these reasons, some economists told CNN this week that it’s possible January would deliver an upside surprise.

They got one.

Also delivering a surprise were wage gains, which surged 0.6% for the month and 4.5% year-over-year.

“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’ chief economist, wrote in a note issued Friday. “Wages growing at this rate, in a labor market this tight, is a problem for the Fed.”

This story is developing and will be updated.

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January jobs report

**This image is for use with this specific article only** Attendees shake hands at a Veteran Employment and Resource Fair in Long Beach, California, on January 9, 2024.

Eric Thayer/Bloomberg/Getty Images

02 Feb 24

Why CNN's business correspondent calls jobs report 'stunningly good'

The US economy added 353,000 jobs last month, according to Bureau of Labor Statistics data, registering a stronger-than-expected gain to kick off 2024. CNN’s Rahel Solomon reports.

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