CBS News business analyst Jill Schlesinger on "killer" January jobs report

The first jobs report of the year emphatically underlined the surprising strength of the U.S. labor market, with robust hiring despite the highest interest rates in two decades.

The U.S. economy added 353,000 jobs in January after upward revisions in November and December, the government reported on Friday. Hiring blew past economists' expectations for 176,000 new jobs, with wages also rising and the unemployment rate remaining near a 50-year low of 3.7%.

It is the first time since the late 1960s that the nation's jobless rate has been below 4% for two consecutive years, according to PNC Financial Services Group.

The latest gains far showcased employers' willingness to keep hiring to meet steady consumer spending. This week, the Federal Reserve took note of the economy's durability, with Chair Jerome Powell saying "the economy is performing well, the labor market remains strong." 

The Fed made clear that while it's nearing a long-awaited shift toward cutting interest rates, it's in no hurry to do so. The latest jobs report could convince the central bank to push off its first rate cut until later in 2024, experts said on Friday.

"The stronger than expected jobs report shows how the job market continues to be a bright spot within the U.S. economy," offered Joe Gaffoglio, President of Mutual of America Capital Management. "Fed Chair Jerome Powell recently signaled that interest-rate cuts may not start as soon as the market wanted, and this jobs report hasn't given him any reason to change that stance."

On Wednesday, the Fed held the rate unchanged at its first policy meeting of the year, with the bank signaling a desire for more progress in fighting inflation in 2024. That is heightening investor focus on exactly when the Fed might release the brakes on the U.S. economy for the first time in two years. 

Wages rising ahead of inflation

Wage growth was also surprisingly strong in January. Average hourly earnings increased 19 cents, or 0.6%, to $34.55, and have risen 4.5% over the past 12 months, keeping just ahead of inflation. 

Treasury yields jumped and stock-index futures trimmed gains in the wake of the report, as market participants bet against the U.S. central bank reducing its benchmark rate as soon as March. 

A series of notable layoff announcements, from the likes of UPS, Google and Amazon, have raised some concerns about whether they might herald the start of a wave of job cuts. Layoffs nationwide more than doubled in January from a month earlier, according to analysis from executive coaching firm Challenger & Christmas.

Yet measured against the nation's vast labor force, the recent layoffs haven't been significant enough to make a dent in the overall job market. Historically speaking, layoffs are still relatively low, hiring is still solid and the unemployment rate is still consistent with a healthy economy.

—With reporting by the Associated Press.

In:
• Unemployment

Kate Gibson

Kate Gibson is a reporter for CBS MoneyWatch in New York.