Employment growth in January was stronger than forecast, with the U.S. economy adding 517,000 jobs, according to the Bureau of Labor Statistics, and the unemployment rate ticking down to 3.4 percent — its lowest rate since 1969. In addition, the totals for November and December were also revised upward, to 290,000 and 260,000, respectively.

In a rapid reaction comment, Oxford Economics cautioned, “The surge in job growth in January overstates the strength in the job market, as employment growth in January frequently surprises to the upside and doesn’t warrant any change to the change to the baseline forecast. Still, we can’t completely write off a job gain of 517,000 in January. Seasonal quirks aside, the data still show a labor market that’s too tight as the Fed tries to get inflation back to 2 percent and leaves the FOMC on track to raise rates at least once more this cycle, with the risk of more rate hikes beyond that.”

Loretta Clodfelter