U.S. Economy Adds a Robust 517,000 Jobs

Unemployment hit a five-decade low, but the positive jobs report increases inflation fears.

February 06, 2023

ALEXANDRIA, Va.—The U.S. economy added 517,000 jobs in January, crushing estimates, while unemployment hit a 53-year low, reports The Wall Street Journal and CNBC.

Dow Jones estimated 187,000 jobs would be added, and January’s number is far higher than the revised 260,000 jobs added in December. The unemployment rate dropped to 3.4% last month, which is the lowest reading since May 1969. The labor force participation rate increased to 62.4%.

January’s jobs increase was the largest since July 2022, ending a five-month trend of lagging payroll growth. The last three months of job gains have averaged 356,000, which is much higher than the 2019 pre-pandemic average of 163,000. The jobs report also showed slowing wage growth. Average hourly earnings were up 4.4% in January year over year, down from a revised 4.8% in December.

“This is just incredibly, surprisingly strong,” Kathy Bostjancic, chief economist at Nationwide, told the Journal. “Not only are you hiring more workers but the workers you have overall are working more hours. It doesn’t really get stronger than that.”

The leisure and hospitality sector added 128,000 workers last month, leading all other sectors, up from 64,000 new jobs in December. The retail sector added 30,000 jobs, while construction added 25,000 positions. Other significant gainers were professional and business services (82,000), government (74,000) and health care (58,000).

The unexpectedly strong jobs report raises questions about whether the economy is beginning to gain momentum after losing some steam over the past few months. The U.S. Federal Reserve recently increased interest rates by a quarter of a percent and is likely to do the same in March. But a resilient labor market could lead to difficult debates at coming meetings over whether the central bank has done enough to neutralize inflation, reports the Journal.

The report shows that there are still 11 million job openings at the end of December, which is still nearly double the number of unemployed people looking for a job.

Federal Reserve chairman Jerome Powell noted in his post-meeting news conference that the labor market “remains extremely tight” and is still “out of balance.”

“Today’s report is an echo of 2022′s surprisingly resilient job market, beating back recession fears,” Daniel Zhao, lead economist for job review site Glassdoor, told CNBC. “The Fed has a New Year’s resolution to cool down the labor market, and so far, the labor market is pushing back.”

NACS has partnered with The Good Jobs Institute on how c-store operators can provide “good jobs,” which meet people’s basic needs and offer conditions for engagement and motivation. The Good Jobs Calculator, designed exclusively for NACS members and the convenience industry, allows retailers to use their own data and customized assumptions about the amount of improvement or uplift achievable, enabling executives to run scenarios on the bottom-line impact of a Good Jobs system.

Economic conditions like employment and inflation have had a huge impact on the convenience retail industry in the past two years. At this year’s NACS State of the Industry Summit, John Benson of AlixPartners LLP will share key insights during the “U.S. Economic Outlook for 2023 and Beyond” session. Registration is open at convenience.org/soisummit.