Jobs report recap: US added 130,000 jobs in January, beating expectations

After a tough year for the labor market, economists touted January's robust gains.

"It was a January job surge. The surprisingly strong job gains in January were driven mainly by health care and social assistance," Heather Long, chief economist at Navy Federal Credit Union, said in a statement. "But it is enough to stabilize the job market and send the unemployment rate slightly lower. This is still a largely frozen job market, but it is stabilizing. That's an encouraging sign to start the year, especially after the hiring recession in 2025."

Laura Ullrich, director of economic research for the Indeed Hiring Lab, echoed that sentiment, saying in a statement that the labor market had a "solid start" to the year.

"That unexpected strength is particularly welcome given benchmark revisions to full-year 2025 data revealed that a labor market already viewed as soft actually performed worse than initially thought. Revisions brought the total number of jobs added last year down by more than 400,000, to only 181,000 for the year — an exceptionally weak year by almost any standard," Ullrich said.

However, Ullrich was worried about the uneven nature of job gains. "There are now real doubts about how long the broader economy can continue to power forward with the job market at an almost complete standstill outside of the essential healthcare sector."

Jeffrey Roach, chief economist for LPL Financial, said in a statement that the economy has "an anemic demand for workers."

"This year may be more of the same with average monthly payroll gains expected to hover around 50,000 but with employers increasing average hours worked, especially in areas like construction with low supply of available workers," Roach said.

For some Americans, finding work has been a lengthy slog. That trend has only grown over the last year.

The share of unemployed workers who are considered long-term unemployed — meaning that they've been out of work or seeking work for 27 weeks or more — ticked up at the end of 2025. Now, as of January 2026, long-term job seekers made up 25% of all unemployed workers, a slight decrease from 26% in December but still elevated from the year prior. There are 386,000 more long-term unemployed Americans than there were in January 2025.

US stock futures popped on the better-than-expected report. Investors are cheering the strength of the labor market, rather than booing the diminished odds of a March rate cut. Bond yields jumped, with the 10-year Treasury yield up four basis points to 4.18%.

"We think this release provides ammunition to the Fed hawks to maintain a patient approach to rate cuts, reinforcing the narrative of a stabilizing labor market," Angelo Kourkafas, Senior Global Strategist, Investment Strategy at Edward Jones, said after the report. "Markets have adjusted accordingly, with bond futures now fully pricing in a Fed cut by July instead of June."

The probability that the Fed holds interest rates steady at the next Fed meeting spiked on CME FedWatch after the jobs report, rising to a 94% from a roughly 80% chance before the report.

Healthcare and social assistance once again bolstered payrolls, with healthcare alone adding nearly 82,000 jobs over the month. Meanwhile, government saw another month of job loss.

White-collar fields saw mixed employment changes. Employment in professional and business services increased 34,000, while both information — which encompasses parts of the tech sector — and financial activities had job losses.

"The healthcare industry was such an important driver of jobs growth in 2025 that we are going to want to watch it closely in 2026 for any signs of a slowdown," Daniel Zhao, the chief economist at Glassdoor, told Business Insider.

Wage growth remained consistent year-over-year, rising 3.7% from January 2025. That's in line with economists' predictions, and comes after a 3.7% increase in December.

For workers, that means a bit more money in their pockets, although growth has cooled a bit from mid-2025 — ultimately bringing wage growth more in line with pre-pandemic levels, and a far cry from the robust Great Resignation-era growth.

Annual revisions in this month's jobs report showed a big downgrade to job growth in 2025.

The revisions showed that only 181,000 jobs were added across last year, down from the initially reported 584,000, indicating an even slower labor market in 2025 than we originally thought.

Those revisions are based on reconciling the monthly survey of businesses that generates the headline job growth numbers with more comprehensive but less timely data from administrative records.

The labor force participation rate rose to 62.5% from December's 62.4%. The employment-population ratio didn't change much either, rising from 59.7% to 59.8%.

The job market was strong in January. The US added 130,000 jobs in January, far surpassing the forecast of 65,000. Unemployment unexpectedly fell from 4.4% in December to 4.3%, just below the forecast of 4.4%.

"This week's jobs report has the potential to meaningfully shift expectations for a rate cut at the Fed's next policy meeting in March," said Jordan Rizzuto, managing partner and chief investment officer at GammaRoad Capital Partners. "Any indications of weaker hiring against the backdrop of the recent jump in announced layoffs may cause the Fed to reconsider their assessment of the labor market's stability."

CME FedWatch, which shows the probability of what the Fed decides with interest rates based on market trades, showed before the new jobs report a roughly 80% chance of a hold at the next meeting.

Mark Hamrick, senior economic analyst at Bankrate, said "a key focus will be the annual benchmark revisions, which could reveal additional weakness in payrolls."

Daniel Zhao, the chief economist at Glassdoor, told Business Insider he will be looking at revisions, any changes to the healthcare sector that have been holding up the job market, and unemployment.

"The unemployment rate in recent months could have still been seeing echoes from the government shutdown," in October and November, Zhao said. "So there's a question about whether the unemployment rate is going to remain at this level or is it going to come back down and show some improvement. As we head into 2026, it would be great to see the unemployment rate stabilize rather than continuing this gradual upward trend."

Job openings continued to fall, dropping from 6.9 million in November to 6.5 million in December. The cooldown was mainly due to declines in the professional and business services, retail trade, and finance and insurance sectors.

Overall, there were more people unemployed than job openings in December.

"What we're seeing is a labor market that's stabilizing and becoming more selective," said Isaac Hagen, a senior vice president at workplace-solutions company ManpowerGroup.

Hagen added that this means there are still job opportunities, but hiring takes longer.

"Employers are still planning to hire, they're just going to hire with a sharper focus on skills and productivity," Hagen said, based on job outlook survey results from ManpowerGroup.

"We have to revise our expectations down significantly for what a monthly job number should look like," Peter Navarro, White House senior counselor for trade and manufacturing, said on Fox Business on Tuesday.

Recently published Census Bureau data showed the US population growth slowed last year to the lowest rate since 2021. Christine Hartley, assistant division chief for estimates and projections at the Census Bureau, said in a press release that was mainly "due to a historic decline in net international migration."

The Census Bureau's migration data — covering the year between July 1, 2024, and June 30, 2025 — doesn't capture all of the immigration policy changes so far during President Donald Trump's second term. However, the slower population growth means that the economy needs to add fewer jobs to keep the unemployment rate stable.

"With immigration so much lower, the workforce is growing more slowly, and the number of jobs that the economy needs to break even is probably under 50,000 jobs a month," Jed Kolko, senior fellow at the Peterson Institute for International Economics, told Business Insider. "Two years ago, that breakeven rate was closer to 170,000 jobs a month."

The quits rate remained at 2% in December, down from 3% in March 2022, the BLS reported on Thursday. Quits are often used as a measure of how confident employees are about being able to find a new job; the low rate is another sign of a relatively slow labor market.

In addition to unemployment, labor force participation, and job growth data for January, the new report will include revisions to employment, hours, and earnings from the last few years, which BLS said reflects "the annual benchmark process and updated seasonal adjustment factors."

Anna Wong, chief US economist at Bloomberg Economics, wrote on X, "We are expecting about 666k downward revisions to March 2025 payrolls level as part of the annual benchmarking," adding "we expect Dec 2025 to see a downward revision near 1 million."

Economists noted that these revisions are a typical part of BLS' process and shouldn't cause alarm. Michael Madowitz, the principal economist at the Roosevelt Institute, wrote in a post that "revisions to data are a sign of accuracy, not inaccuracy or conspiracy" and will affect a small percentage of the actual employment level.

"If we revise from adding around 600,000 jobs to losing 250,000 or more (as the September data forecasts suggest), the headlines are unlikely to be subtle," Madowitz said. "Economists and job market watchers won't be thrown by revisions (up or down) of around 0.6 percent in an economy with more than 160 million jobs."

Economist Guy Berger said on Tuesday in a LinkedIn post: "If your perspective on the labor market changes radically as a result of tomorrow's revisions, I strongly recommend you re-evaluate how you evaluate labor market data!"

Amazon, UPS, Workday, the Washington Post, and other employers have already announced layoffs this year.

Amazon's layoffs are on top of previous job cuts made in October. "While my search has been discouraging, I know I can't afford to slow down, especially as more laid-off workers flood the market and competition increases," James Hwang, who was part of the October layoffs at Amazon, told Business Insider.

Data out last Thursday showed the rate of layoffs and discharges continued to be low in December, at 1.1%. The rate for transportation, warehousing, and utilities spiked from 1.4% in November to 2.9% in December.

President Donald Trump wrote on Truth Social on January 30 that he had nominated Brett Matsumoto as commissioner of the Bureau of Labor Statistics. Trump fired former Commissioner Erika McEntarfer last year after the July jobs report showed weaker-than-expected growth and large revisions to previous gains.

Matsumoto has been an economist at the Bureau of Labor Statistics since 2015 and has an educational background in economics, including a Ph.D. from the University of North Carolina at Chapel Hill. He's been part of the White House's Council of Economic Advisers during both of Trump's presidential terms.

Claudia Sahm, the chief economist at New Century Advisors, wrote on X, "Excellent choice!"

Ernie Tedeschi, the chief economist at Stripe, wrote on X that he "had several thought-provoking interactions over the years" with Matsumoto.

President Donald Trump nominated Kevin Warsh as the next Fed chair. Powell's term ends in May, but he could stay on the Board of Governors until 2028.

While many economists viewed Warsh as a strong pick, some had reservations. "He's long on criticisms and short on solutions, which is troubling for someone who served as a Fed official during the largest financial and economic crisis since the Great Depression," Claudia Sahm, the chief economist at New Century Advisors, said about Warsh in a Substack. "While I have questions about his judgment and ability to maintain the Fed's independence, I also respect his public service and commitment to economic policy."

Trump recently told reporters he thinks Warsh "certainly wants to cut rates."

"The hope is that whoever takes Powell's role next will be similarly data driven and level headed," Elizabeth Renter, the senior economist at NerdWallet, told Business Insider before Trump's nomination. "A Fed that is vulnerable to political pressure is one that will struggle to be effective at guiding economic stability."

Fed chair Jerome Powell said at a press conference on January 28 that job market "conditions may be stabilizing after a period of gradual softening."

He said there's been "little change" in several indicators, including layoffs and wage growth.

"A good part of the slowing in the pace of job growth over the past year reflects a decline in the growth of the labor force, due to lower immigration and labor force participation, though labor demand has clearly softened as well," Powell said.

The Fed decided to hold interest rates steady in its first decision of the year at the end of January, after three straight cuts before 2025 ended. The December press release said "downside risks to employment rose in recent months," but the January press release didn't include that.

Job seekers' frustrations with finding a job will likely persist this year. Data from Indeed showed that it's taking longer for job postings to become hires than a few years ago.

Cory Stahle, an economist at the Indeed Hiring Lab, said that could be due to less urgency, more uncertainty, and a qualifications mismatch.

"Longer hiring times, paired with muted overall hiring activity, suggest that finding a job may prove difficult for many job seekers in 2026," Stahle told Business Insider.

Guy Berger, senior fellow at the Burning Glass Institute, expects this year to "look a lot" like the past few years, with a weaker job market that still avoids a recession.

"The labor market will end up in mildly worse condition than how it started: slightly higher unemployment (with most of the increase concentrated among the young), slightly lower hiring and turnover, and minimal or no increase in layoffs," Berger wrote in his Substack.

Leisure and hospitality had the largest gain over the month in December among major industries, adding 47,000 jobs. Retail had the largest loss, falling by 25,000.

Looking at the year overall, healthcare and social assistance were bright spots, adding over 700,000 jobs between December 2024 and December 2025. The government and the professional and business services sectors had relatively large job losses. Many government workers took the federal buyout offered as part of the big DOGE-backed employment cuts last year.

"I'd enjoyed my time in the federal government, but it was clear that this would no longer be the same job I'd signed up for," said Jide Adebowale, who took the buyout and has since landed a job in the tech sector.

Last month's report showed the US added 50,000 jobs in December, below the expected 70,000.

It capped off several months of weak gains and even a few reports showing job losses. Laura Ullrich, the director of economic research in North America at the Indeed Hiring Lab, said these have been "mediocre" reports when taken together.

"It doesn't have to be a really bad report for the cumulative effect to be pretty negative," Ullrich told Business Insider.

The new report will include revised employment, hours, and earnings data, so the past few years of data could be affected.

Cooler job growth didn't lead to a massive surge in unemployment last year. Unemployment rose from 4% in January to 4.4% in December, still pretty low.

Preston Caldwell, the chief US economist at Morningstar, said in commentary that unemployment hasn't accelerated even more quickly because the drop in the supply of workers is offsetting cooler demand for workers.

"Even though the unemployment rate is still fairly low by historical standards, there's not much hiring or firing going on, and that's bad news for people who are trying to find a job," Jed Kolko, senior fellow at the Peterson Institute for International Economics, told Business Insider. "We've seen employment fall for younger workers who are typically near the beginning of their career."

Investors are holding their breath for today's jobs report.

Futures for the three main US stock indexes are virtually unmoved as of around 6 a.m. ET. S&P 500 futures are flat, Dow Jones futures are up about 0.1%, and Nasdaq 100 futures are down about 0.1%.

Precious metals are trading higher with gold up 1.9% at around $5,130 an ounce, and silver up 6% at just over $85 per troy ounce. Crude oil prices are also in the green with Brent crude up 1.3% at around $69.70, and West Texas Intermediate up 1.4% at $64.80.