Surge in US hiring surprises markets

WASHINGTON: US job gains surged unexpectedly last month as unemployment slipped to its lowest rate in more than five decades, government data showed on Friday, despite efforts to cool economic activity.

The world’s biggest economy added 517,000 jobs in January after a five-month slowdown in hiring, as the jobless rate edged down to 3.4%, the Labor Department said in a report.

The dollar jumped in response to the news, which could potentially embolden the Federal Reserve to keep raising interest rates, just as the market thought it might start slowing down.

“Job growth was widespread, led by gains in leisure and hospitality, professional and business services, and health care,” the report said.

The figure, which could prove concerning to policymakers, defied expectations of a further decline in job gains, and marks a sharp rise from 260,000 new jobs in December.

With central bankers on an aggressive campaign to tamp down red-hot inflation, a key area of concern is the labour market, with demand exceeding the supply of available workers and employers keen to retain staff they may have struggled to find during the pandemic.

While unemployment is typically seen to edge up as interest rates rise, the jobless rate has hovered at historically low levels.

The Federal Reserve has also been monitoring wage growth on concerns that elevated salaries could feed into services inflation.

In January, average hourly earnings rose by 0.3%, to $33.03, said the Labor Department.