--- title: Unemployment Hits Lowest Rate in Decades — and Wall Street Doesn't Know What to Make of It description: The unemployment rate fell to 3.4% in January as the economy added 517,000 jobs. Stocks were down early Friday before rebounding. authors: - name: Pete Grieve role: Lead News Reporter url: https://money.com/author/pete-grieve/ bio: Pete Grieve is a personal finance reporter. In his time at Money, Pete has covered everything from car buying to credit cards to the housing market. education: University of Chicago, BA Political Science at_money_since: 2022 articles: 599 covers: - Economy and Politics - Banking - Business - Career Advice - Credit - Credit Cards - Debt - Education - Health and Wellness - Housing - Identity Theft - Insurance - Investing - Lifestyle - Loans - Mortgages - Personal Finance - Professional Services - Retirement - Shopping - Taxes social: - https://twitter.com/pete_grieve - https://linkedin.com/in/pete-grieve-b5aa02138 - https://www.facebook.com/petegrieve4 editors: - name: Brad Tuttle role: Senior Editor url: https://money.com/author/brad-tuttle/ bio: Brad Tuttle is a former senior editor at Money with over 10 years’ experience covering a vast number of personal finance topics, including careers, cars, travel, budgeting, investing, insurance, credit cards, consumer psychology, real estate, banking, and shopping and deals. education: Columbia University School of Journalism, MS at_money_since: 2014 articles: 366 covers: - Economy and Politics - Banking - Business - Career Advice - Credit - Credit Cards - Education - Health and Wellness - Housing - Identity Theft - Insurance - Investing - Lifestyle - Loans - Mortgages - Personal Finance - Pets - Professional Services - Retirement - Shopping - Taxes - Technology social: - https://twitter.com/bradrtuttle - https://linkedin.com/in/brad-tuttle-834b225 former_staff: true published: '2023-02-03T17:57:41.000Z' modified: '2024-01-10T13:06:53.000Z' section: Economy and Politics tags: - Jobs - News - stocks word_count: 458 canonical: https://money.com/unemployment-january-jobs-report-stock-market/ type: NewsArticle source: structured-blocks --- > **Disclosure:** We research all brands listed and may earn a fee from our partners. Research and financial considerations may influence how brands are displayed. Not all brands are included. [Learn more](https://money.com/page/disclaimer/). ![A Help Wanted sign seeking workers is on a window in Port Washington, New York](https://img.money.com/2023/02/News-2023-Unemployment-Lowers.jpg) The U.S. economy added 517,000 jobs in January as the unemployment rate fell to 3.4% — the lowest level in more than 50 years. While the numbers bode well for the jobs market and the economy in general, the stock market reaction was mixed**.** Today's January [jobs report](https://www.bls.gov/news.release/empsit.nr0.htm) came in much stronger than expected, beating the Wall Street consensus of a gain of 190,000 jobs. Job growth was "widespread" in January, according to the Bureau of Labor Statistics, but it was strongest in leisure and hospitality, professional and business services and health care. ## Why it matters The economy added the most [jobs](https://money.com/best-job-search-sites/) in a month since July, indicating that labor is still in hot demand. Strong jobs numbers and low unemployment suggest workers continue to have leverage, and average hourly earnings were up 0.3% in January and 4.4% over the past year. - The [stock market](https://money.com/how-to-buy-stocks/) dipped early Friday following the release of the job numbers, likely because the Federal Reserve partially [bases its interest rate decisions](https://money.com/what-september-jobs-means-for-stocks/) on the state of the labor market. Strong jobs numbers could prompt the Fed to consider higher rates, which is the opposite of what investors want. By midday, stocks had mostly bounced back and the S&P 500 was basically flat on the day. - After the Fed announced a smaller 25 basis point [interest rate hike](https://money.com/fed-interest-rate-hike-february-2023/) earlier in the week, Fed Chair Jerome Powell said, "The labor market continues to be out of balance. Labor demand substantially exceeds the supply of available workers." - Seema Shah, chief global strategist of Principal Asset Management, says higher interest rates could be on the horizon: "It’s difficult to see how wage pressures can possibly soften sufficiently when jobs growth is as strong as this and it’s even more difficult to see the Fed stop raising rates and entertain ideas of rate cuts when there is such explosive economic news coming in." ## Keep in mind - Annual population corrections were made between the December and January jobs reports, which may have skewed the numbers, experts say. Still, the report is considered to be strong. - "Don’t get too distracted by the size of the blowout payrolls number," says Callie Cox, U.S. investment analyst at eToro. "There are a bunch of revisions in play since it’s the beginning of the year. But it’s also obvious that we’re underestimating the strength of the job market." ## Bottom line The labor market appears to be tighter than experts thought, which is good news for workers but could be a bad signal for anyone hoping for lower interest rates. ```json { "@context": "https://schema.org", "@graph": [ { "@type": "BreadcrumbList", "@id": "https://money.com/unemployment-january-jobs-report-stock-market/#breadcrumb", "itemListElement": [ { "@type": "ListItem", "position": 1, "name": "Home", "item": "https://money.com" }, { "@type": "ListItem", "position": 2, "name": "Economy and Politics", "item": "https://money.com/economy-and-politics/" }, { "@type": "ListItem", "position": 3, "name": "Unemployment", "item": "https://money.com/unemployment/" }, { "@type": "ListItem", "position": 4, "name": "Unemployment Hits Lowest Rate in Decades — and Wall Street Doesn't Know What to Make of It" } ] }, { "@type": "WebSite", "@id": "https://money.com/#website", "url": "https://money.com", "name": "Money", "publisher": { "@id": "https://money.com/#organization" } }, { "@type": "WebPage", "@id": "https://money.com/unemployment-january-jobs-report-stock-market/#webpage", "url": "https://money.com/unemployment-january-jobs-report-stock-market/", "name": "Unemployment Hits Lowest Rate in Decades — and Wall Street Doesn't Know What to Make of It", "isPartOf": { "@id": "https://money.com/#website" }, "datePublished": "2023-02-03T17:57:41.000Z", "mainEntity": { "@id": "https://money.com/unemployment-january-jobs-report-stock-market/" }, "inLanguage": "en-US", "breadcrumb": { "@id": "https://money.com/unemployment-january-jobs-report-stock-market/#breadcrumb" }, "dateModified": "2024-01-10T13:06:53.000Z" }, { "@type": "NewsArticle", "headline": "Unemployment Hits Lowest Rate in Decades — and Wall Street Doesn't Know What to Make of It", "articleSection": "Economy and Politics", "image": [ { "@type": "ImageObject", "url": "https://img.money.com/2023/02/News-2023-Unemployment-Lowers.jpg", "width": 5243, "height": 3497, "caption": "News-2023-Unemployment-Lowers" } ], "author": [ { "@type": "Person", "name": "Pete Grieve", "url": "https://money.com/author/pete-grieve/", "@id": "https://money.com/author/pete-grieve/#author", "description": "Pete Grieve is a personal finance reporter. 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