The US added 353,000 jobs in January, much more than the 185,000 economists were expecting. The unemployment rate was unchanged at 3.7%. Wall Street had expected it to rise to 3.8%. Average hourly earnings rose more than anticipated.

Yahoo Finance Live reports the breaking numbers.

Editor's note: This article was written by Stephanie Mikulich

Video Transcript

- So here we are here getting the numbers. Wow. Look at that change in nonfarm payrolls. 353,000, blowing past expectations. Remember, the survey number was 185,000. Unemployment rate holding steady at 3.7% from that prior reading. Now, that was lower than what the Street had been anticipating here of a 3.8%. They were anticipating an increase in that unemployment rate numbers. Guys, I am shocked by this headline number here. Let's dig in.

- I think the market's going to be shocked too. Look, you see futures showing. You see that futures give back just like we talked about.

- Yeah, exactly. And digging in here, let's take a look at some of these average hourly earnings. Month-over-month basis increasing by 6/10 of a percent, much hotter than what the Street was looking for. A year-over-year basis, an increase of 4 and 1/2%, higher, much higher, than what we got last month of that 4.1% year-over-year basis. Labor force participation rate coming in at 62.5%. We got to take a look at the futures and the reaction that we are seeing here to this much stronger than expected jobs report.

- I caution everyone. This is just the initial reactions. This requires a lot more digging on what drove this massive upside. I'm looking at the report right now. Professional and business services, like we just talked about ahead of the numbers, that was a downtrend. 74,000 jobs created in January. Health care rose 70,000 jobs. Maybe that's people preparing for the Ozempic wave and handing out a lot of shots. Unclear to me. And then the retail trade up 45,000, which, guys, to me doesn't make a lot of sense because all we have heard post holiday is layoffs sweeping the retail sector and the tech sector. So there's a lot to digest here.

- I think the larger question coming off of this and this hot print, red hot print, is what the Fed does not only in March, but also now in May. Does it cast into question once again whether or not there were actually be a cut that comes forward in May if you've got a Fed that is more willing to continue to hang its hat on the employment situation and continue combating inflation?

- And let me just add here too we also got two upward revisions to the prior month's data. November revised up by 9,000. December revised up by 117,000. So it wasn't this report just blew away market expectations. Really, now you're getting a picture that the labor market perhaps accelerated into year end.

- And this is what's very surprising here, I think, to the Street, to investors out there who have been following this story because there was a real focus on some of those revisions that we were going to get ahead of this print. But the thought process there was, hey, maybe the jobs market had cooled faster than what the initial headline numbers had reflected.

But when you take a look at these revisions, a revision to the upside there showing the exact opposite, that, hey, the jobs market much hotter than what we had been anticipating and what we had been shown over the last couple of months. And then when you get a blow out headline number like this, obviously a little bit noisy for the month of January given the seasonality factors there, but certainly nearly double what the Street was almost anticipating.

- Yeah. Some of the sectors that saw the biggest job gains occurring in professional and business services, health care, retail trade, and social assistance. I mentioned health care before we even started this. And we're going to get some more color on that as well going forward from our reporting and our entire team covering this. But rose by 70,000. So you look at this average that continues to come forward. 58,000 per month in 2023. And now, of course, it's important to remember that this is a mid month to mid month type of reading. And so going forward from here, it'll be interesting to see where that also dovetails into some of the investment strategy that we've also heard.

- Important to note-- let's zoom out here. Bigger picture for investors, guys. The employment market from November now to January suggests that whole trade that worked so well last year, buy the Magnificent Seven because we might get more rate cuts and everybody's buying AI chips, I think this really starts to dent that. I'm surprised to see NASDAQ futures hanging in there. And I get we had a blowout Amazon report. Apple was a little squishy. That was OK. But nonetheless, this really is fly in the ointment to the bulls that really have bought a lot of stocks going into last year and then I would argue that push markets to new highs earlier this year. This just blows up that trade, I think.