Jobs added to the U.S. economy in January far surpassed expectations, according to a new report from the U.S. Bureau of Labor Statistics (BLS). Continued growth comes despite a series of interest rate hikes by the Federal Reserve intended to slow the economy in order to combat rising inflation.
Based on preliminary estimates, employers added 517,000 jobs to the nonfarm payroll. The consensus among most economists was a projection of less than 200,000 jobs gained. BLS notes that growth was widespread across multiple job sectors, but the areas with the highest growth included leisure and hospitality, professional and business services, and health care. The January report caps 24 months of consistent job growth for the U.S. economy. The U.S. fully recovered jobs lost during the pandemic in June 2022 and has continued to build on that amount ever since.
The unemployment rate – a measure of individuals not currently employed but actively seeking work – dropped to 3.4 percent, the lowest unemployment rate on record since 1969. The workforce participate rate, which measures the percent of the adult population participating in the workforce, was 62.4 percent. Though workforce participation has been trending upwards since the depths of the pandemic in April 2020, it remains 0.9 points lower than it was in the months before the pandemic started.
“This new report shows an economy that continues to grow despite interest rate hikes by the Federal Reserve, uncertainty created by the war in eastern Europe, and a series of layoffs in the technology sector. On the whole, this is good news,” said Kentucky Chamber Center for Policy and Research Executive Director Charles Aull. “Some of the biggest questions, though, are how might the Fed react and what does this say about the possibility of a ‘soft landing,’ which has been the goal of the Fed’s strategy in fighting inflation.”
Aull also pointed out that employers continue to be eager to hire new employees to meet the demands of customers. Another report released this week showed that job vacancies in December returned to more than 11 million openings, far surpassing the number of unemployed individuals looking for work at roughly 5.7 million. “The mixed dynamic of high demand for workers but limited supply of individuals looking for work continues to be a challenge for employers and adds an additional layer of complexity and vulnerability to the economy,” said Aull. “Adding more individuals to the workforce and increasing workforce participation has be a top priority if we want to reach a sustainable and consistent level of growth. This is especially critical in Kentucky, where job openings have far outpaced unemployment over the past year.”
Data for Kentucky will be released later this month. Job growth in Kentucky has been trending downwards since September 2022, and unemployment has ticked up from a historic low of 3.7 percent over the summer to 4.0 percent in December 2022. 4.0 percent is a comparatively low level of unemployment for Kentucky and matches the state’s rate in the months before the pandemic. Workforce participation in Kentucky has been a consistent struggle, however. In December, workforce participation in Kentucky was just 57.6 percent, more than 4 points below the nationwide rate and the seventh lowest in the nation. The Kentucky Chamber Center for Policy and Research released a report last November calling for a statewide strategy to increase workforce participation in Kentucky.