Hiring Slows but Remains Solid, With Economy Adding 143,000 Jobs
The job market kept chugging along in January, albeit at a slower pace than the previous two months.
The U.S. economy added 143,000 jobs last month and the unemployment rate edged down to 4%, the Labor Department said Friday. The numbers show a job market that is cooling but still solid.
The gain in jobs was a drop from November and December and was less than the 169,000 jobs economists had expected, according to a Wall Street Journal survey. However, the job market in November and December was stronger than previously thought, with the job counts revised upward by a combined 100,000 jobs.
The unemployment rate for January was below the 4.1% economists had expected.
Employment figures can bounce around from month to month, and despite the moderation in job growth, economists still characterized the report as solid.
“The softer 143,000 gain in payrolls in January is nothing to be concerned about following the upward revisions to payrolls in November and December,” Stephen Brown, deputy chief North America economist at Capital Economics, an analysis firm, said after the data release.
Stocks finished the day in the red , with the Dow Jones Industrial Average and the S&P 500 both losing about 1%.
Sectors including healthcare, retail and government added jobs. Employment declined in mining and oil and gas extraction. The job market has cooled from its red-hot streak that began during the pandemic, but it remains strong. Hiring and job quitting have both slowed, but layoffs remain at long-time lows.
Cory Stahle, an economist at Indeed Hiring Lab, said employers appear to be maintaining a “business as usual attitude in the face of political noise, rapid policy adjustments and ongoing geopolitical uncertainty,” helping the labor market maintain an even keel. But that could change, he added.
The share of people with a job who are in their prime working years, age 25 to 54, edged up to 80.7%. Guy Berger, director of economic research at the Burning Glass Institute think tank, called that another sign of a healthy economy. Prime-age workers have largely finished school but aren’t approaching retirement.
“These are the people we think of as being most likely to be engaged,” Berger said. “If there are a lot of them working, it’s good news.”
The January jobs figures are the final report of the Biden era, and come as newly sworn-in President Trump rolls out policies likely to affect the labor market. He has promised to cut immigration and says he is launching the largest deportation operation in U.S. history, which could curtail growth in the labor force. JPMorgan analysts said an immigration slowdown could “start to affect payroll growth soon, potentially by the time of the February jobs report.”
Tariffs are another wild card. Trump has already imposed new import tariffs on Chinese goods and has threatened new tariffs on products from Canada, Mexico and the European Union. Economists warn that such levies could crimp trade , economic growth and the labor market.
Labor economists are also watching the Trump administration’s efforts to cut government spending and encourage government workers to resign .
Trump has said his policy plans, including new import tariffs and corporate tax cuts, will spur more factory construction and manufacturing job growth.
What this means for the Fed
The details of the January jobs report is unlikely to divert the Federal Reserve from its current wait-and-see mode on interest-rate cuts.
The Fed is looking for evidence that inflation will continue to come down to its target and has signaled little concern that the labor market will be a near-term source of inflationary pressures.
Signs that the labor market is slowing down more rapidly could restart a conversation about interest-rate cuts because evidence of a material weakening in economic activity could suggest that the Fed’s interest-rate stance is restricting growth. Officials have signaled they are comfortable with a more reactive posture as they wait to see if first-quarter inflation figures, which have been high in recent years, settle down.
Wages grew faster than economists had expected and continued to outstrip inflation, a sign the U.S. workers’ buying power is still rising.
Wildfires and winter
The Labor Department said the Los Angeles wildfires had no discernible effect on the payrolls number or the unemployment rate. Neither did a snap of particularly cold weather in January, the department said.
Some economists said they still believed the events had an impact, citing a drop in leisure and hospitality payrolls and only a slight uptick in construction. Stahle, the economist at Indeed, said he expected the fires to have an impact on jobs numbers in the months ahead.
Roughly 0.5% of California’s population went under evacuation order during the fires, Goldman Sachs economists noted.
Revising the previous numbers
Friday’s report also included regularly scheduled annual revisions to previously released numbers.
Those revisions showed that the number of jobs created in the year through March 2024 was lower than previously reported. But they also showed that the number of employed Americans is substantially higher than previously reported.
The job count for the year ended March 2024 was revised down by 598,000 when unadjusted for seasonal swings, or 0.4%. That was less than the unadjusted 818,000 decline the Labor Department had estimated in a preliminary report in August.
When payroll figures are first released, they come from a large monthly survey of U.S. employers. But they get revised because the Labor Department later goes back and compares these survey numbers with more-complete county wage and employment data.
A separate revision showed that there were 2 million more people employed in December than previously shown. The number of unemployed people—those actively looking for work—increased by 105,000. These new estimates are reflected in the Labor Department’s January figures, but past data doesn’t get revised.
The Labor Department relies on population estimates from the Census Bureau to determine employment levels. And in December, the Census Bureau substantially raised its population estimates to reflect the surge in immigration that began in 2021.
Josh Hirt, senior U.S. economist at Vanguard, said that January’s 4% unemployment rate was a sign of labor market strength.
“We knew we were going to get some revised population numbers and we were going to see more people in the labor force, more supply. So to see the unemployment rate actually fall in that environment is quite telling as well,” Hirt said. “It does say that the pace of job growth is actually overcoming what we’re seeing from some of those population adjustments.”
Write to Jeanne Whalen at [email protected] and Justin Lahart at [email protected]