US Employers Added 143,000 Jobs In Solid But Unspectacular January Hiring, Jobless Rate Fell To 4%
The U.S. labor market showed signs of cooling in January 2025, with employers adding 143,000 jobs, falling short of expectations. Despite the slowdown, the unemployment rate edged down to 4%, marking the lowest level since May 2024. This data, released by the Bureau of Labor Statistics, suggests a more subdued hiring trend as the economy enters the second term of President Trump.
Key Highlights from the January Jobs Report
- Job Growth Slows: January saw 143,000 jobs added, below forecasts and lower than the revised 2024 monthly average of 166,000.
- Unemployment Rate Drops: The jobless rate fell to 4%, down from 4.1% in December.
- Wage Growth Surges: Average hourly earnings rose 0.5% in January, up 4.1% year-over-year, driven by end-of-year bonuses and cost-of-living adjustments.
- Sector Trends: Health care, social assistance, retail, and government led job gains, while mining and oil extraction lost 8,000 jobs.
What Does This Mean for the U.S. Labor Market?
The latest jobs report paints a picture of a labor market that is robust but losing momentum. Economists attribute the slowdown to cautious hiring practices by businesses and a lack of significant workforce churn. Gregory Daco, chief economist at EY-Parthenon, described the market as “frozen,” with employers carefully managing their workforce amid economic uncertainty.
Impact of Policy Changes
President Trump’s policy agenda, including federal payroll cuts and large-scale deportations of unauthorized migrants, could further influence employment trends. These measures may affect both job creation and the availability of workers in key industries.
Wage Growth: A Silver Lining
Despite the hiring slowdown, wage growth remained strong. The 4.1% year-over-year increase in average hourly earnings exceeded expectations, providing some relief to workers amid rising living costs.
What’s Next for the Federal Reserve?
The Federal Reserve’s rate-setting committee will meet next month to assess the latest economic data, including another jobs report. While the January figures show a cooling labor market, they are unlikely to significantly impact the Fed’s decision on interest rates. Austan Goolsbee, president of the Federal Reserve Bank of Chicago, emphasized that long-term inflation expectations remain aligned with the Fed’s 2% target.
Consumer Sentiment and Inflation Concerns
The University of Michigan’s consumer survey revealed a sharp rise in short-term inflation expectations, with consumers anticipating a 4.3% price increase over the next year. This uptick reflects growing concerns about potential trade wars and their impact on the economy.
Key Takeaways
- The U.S. labor market is showing signs of moderation, with slower job growth and cautious hiring.
- Wage growth remains strong, offering some support to workers.
- Policy changes, and economic uncertainty could shape employment trends in the coming months.
