NEW YORK (Reuters) – Goldman Sachs said on Monday it now sees a 25% probability of the United States entering a recession in the next 12 months, down from a previous 35% forecast.

“Continued strength in the labor market and early signs of improvement in the business surveys suggest that the risk of a near-term slump has diminished notably,” the bank said in a research note.

The updated forecast follows an employment report on Friday that showed U.S. job growth accelerated sharply in January while the unemployment rate hit more than a 53-1/2-year low of 3.4%, pointing to a stubbornly tight labor market.

Economists polled by Reuters in December put a 60% probability on a recession taking place in 2023.

(Reporting by Davide Barbuscia; Editing by Sandra Maler)