The number of U.S. nonfarm payrolls increased by the largest amount in more than a year in January, and the unemployment rate unexpectedly fell, indicating that the labor market will continue to stabilize in early 2026.
employer Data released by the U.S. Bureau of Labor Statistics on Wednesday showed that 130,000 new jobs were created last month and the unemployment rate fell to 4.3%. This follows a revision to the previous year, which showed a marked slowdown in hiring. Job creation averaged just 15,000 per month last year, down from the 49,000 initially reported.
Reports show the labor market is finding its footing after a year of rising unemployment and minimal hiring. While economists expect hiring to remain generally sluggish in 2026, the president’s impact will become clearer donald trump Economic policies and lower borrowing costs may encourage some employers to increase headcount.
January’s data reinforced Fed officials’ preference to keep interest rates on hold for now. Traders pushed back the timetable for the next rate cut from June to July.
Chairman Jerome Powell left interest rates unchanged last month, citing signs that the job market was stabilizing.
“It’s good news coming out of the hiring slump in 2025,” said Heather Long, chief economist at Navy Federal Credit Union. “I think Fed Chairman Powell is right — the labor market appears to be stabilizing.”
With the release of the jobs report each January, the Bureau of Labor Statistics compares the payroll to a more accurate but less timely series called the Quarterly Census of Employment and Wages. The data is based on state unemployment insurance tax records and covers most U.S. jobs.
The adjustment shows job growth in the 12 months to March 2025 was nearly 900,000 lower than initially reported. That number is roughly in line with preliminary estimates from the Bureau of Labor Statistics.
Job growth in January was led primarily by health care, which will account for the majority of job growth in 2025. Construction, professional and business services also added jobs, while manufacturing posted its first monthly job gain in more than a year. Federal employment continues to decline.
While layoffs have generally remained limited, companies such as Amazon.com Inc., United Parcel Service Inc. and others have made a wave of layoff announcements in recent weeks. Job openings across the economy fell to their lowest level since 2020 heading into this year.
two surveys
The jobs report consists of two surveys, one of businesses (which produces employment data) and the other of households (which is the source of the unemployment rate). In the household survey, the participation rate – the share of people working or looking for work – edged up to 62.5% in January.
There are other positive aspects, including the biggest fall since June 2022 in the number of people working part-time for economic reasons. More workers are leaving their jobs, signaling confidence in their ability to find new jobs. The number of people unemployed for at least 27 weeks also fell significantly.
Wednesday’s release also includes broad revisions to employer surveys. With the release of January 2026 data, the Bureau of Labor Statistics updated its so-called births and deaths model, which takes into account the net number of businesses opening and closing. Economists noted that the change should improve the model’s responsiveness to current economic conditions and reduce the size of baseline revisions over time.
Employment numbers have adjusted more sharply than usual in recent years, which some economists attribute to unique post-pandemic dynamics. The revisions have also become highly politicized, which was largely behind Trump’s firing of the former BLS commissioner when he claimed without evidence that the data had been manipulated for political purposes.
While the January jobs report typically incorporates new population estimates from the Census Bureau into household surveys, those data were delayed by a month because of last year’s record-breaking government shutdown. Trump administration officials have tried in recent days to recalibrate expectations for incoming jobs data due to deportations and slowing population growth.
Separately, the employment report showed average hourly earnings increased 0.4% from December. Economists watch this indicator closely as a driver of household spending.
Wednesday’s jobs report was originally scheduled for February 6 but was postponed due to the partial government shutdown.
