U.S. Unemployment Drops to Lowest Since 1969 as Hospitality Leads Hiring Surge
By Celia Young February 3, 2023 11:03 am
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U.S. employers added 517,000 jobs in January in a wave of hiring that beat expectations, even as interest rates continue to rise.
Job gains in the hospitality, professional services and health care industries drove the unemployment rate down to 3.4 percent, its lowest rate since 1969, according to a January report from the U.S. Bureau of Labor Statistics as reported by The New York Times.
The strong hiring numbers come as the Federal Reserve has tried to cool the labor market and control the rate of inflation, which fell from 7.1 percent in November to 6.5 percent in December 2022, CNBC reported. The Fed announced its sixth straight interest rate increase on Wednesday, though its 25 basis point hike was smaller than the Fed’s previous five increases.
But the labor market has stayed strong. The leisure and hospitality sectors added 128,000 jobs in January, compared with an average of 89,000 jobs added per month in 2022. Health care firms also beat 2022 monthly average hiring gains, adding 58,000 jobs, and professional and business services employers tacked on another 82,000 jobs in January.
Those positive hiring gains could further stoke inflation and a tough response from the Fed, said Lawrence Yun, chief economist for the National Association of Realtors.
“Robust job data will raise the prospect of consumer price inflation and the need for a more aggressive monetary policy to rein in inflation,” Yun said in a statement. “So just as mortgage rates were trending down towards 6 percent, there could be a temporary rise.”
But Yun cautioned that active apartment construction, expected to help rents stabilize, should lower consumer price inflation and halt Fed rate hikes this summer.
Celia Young can be reached at cyoung@commercialobserver.com.
