Jobs report: U.S. economy adds 517,000 jobs in January, unemployment rate falls to 3.4% as labor market surprises

U.S. job growth blew past expectations in the first month of the year as the labor market continued to breeze through inflation-fighting monetary tightening by the Federal Reserve.

The Labor Department released its monthly jobs report for January at 8:30 a.m. ET on Friday. Here are the numbers, compared to Wall Street estimates:

Non-farm payrolls: +517,000 vs. +188,000 expected

Unemployment rate: 3.4% vs. 3.6% expected

Average hourly earnings, month-over-month: +0.3% vs +0.3% expected

Average hourly earnings, year-over-year: +4.4% vs. +4.3% expected

This content is not available due to your privacy preferences.Update your settings here to see it.Friday's shock report marks a sharp jump from the prior month, which saw payrolls rise by an upwardly revised 260,000. The unemployment rate slipped back down to 3.4% in January, the lowest since 1969.

January's figures come just as the employment picture began to show some signs of moderation, with monthly data on a downtrend in recent months before last month's outlier report.

U.S. stock futures sank following the release as the latest data defied investor optimism the Federal Reserve may pause its interest rate-hiking campaign in coming months.

"This is a labor market on heat. Nobody would have expected a number as monstrous as this!" Principal Asset Management chief global strategist Seema Shah said in a note. "Is Powell now wondering why he didn’t push back on the loosening in financial conditions?"

"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."

(This post is breaking. Please check back for updates.)

Federal Reserve Board Chairman Jerome Powell speaks at a news conference on February 01, 2023 in Washington, DC. (Photo by Kevin Dietsch/Getty Images)Alexandra Semenova is a reporter for Yahoo Finance. Follow her on Twitter @alexandraandnyc

Click here for the latest economic news and economic indicators to help you in your investing decisions

Read the latest financial and business news from Yahoo Finance

Download the Yahoo Finance app for Apple or Android

Follow Yahoo Finance on Twitter, Facebook, Instagram, Flipboard, LinkedIn, and YouTube
Click Here To Get Funded!