US job growth slows in January with 143,000 additions, unemployment drops to 4%

Job creation in the United States was lower than expected in January, according to data released by the Bureau of Labor Statistics (BLS) on Friday. The unemployment rate edged down and worker wages rose sharply, it said.

In January, 143,000 new jobs were added, which is fewer than the 307,000 jobs added in December and lower than the 169,000 that experts had predicted. The unemployment rate dropped slightly to 4%.

The report also made some important updates to the 2024 job numbers. While the total number of jobs was revised down, the number of people reported as having jobs went up.

Monthly job creation in the US

The BLS revised job numbers for the year, cutting 589,000 jobs from March 2024, but an earlier adjustment in August had shown a bigger reduction of 818,000. The number of people reported as working jumped by 2.23 million due to population and immigration changes.

In January, most job growth happened in health care (44,000), retail (34,000), and government (32,000), with a total of 143,000 new jobs, a bit below the usual 166,000. Social assistance gained 22,000 jobs, while mining lost 8,000. The BLS also revised job numbers for November and December, increasing them by 100,000 combined.

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US unemployment rate

The unemployment rate fell as more people started looking for work, with the participation rate rising to 62.6%, up by 0.1% from December. A broader measure of unemployment, which includes discouraged workers and those working part-time for economic reasons, stayed at 7.5%.

Although job growth was slower than expected, wages increased more than anticipated. Average hourly earnings went up by 0.5% in January and by 4.1% compared to last year, higher than the predicted 0.3% and 3.7%.

US wage growth

Markets showed little reaction to the report, with stock futures flat and Treasury yields up.

Ellen Zentner of Morgan Stanley noted that the lower-than-expected January jobs number was offset by upward revisions for November and December, plus a drop in the unemployment rate. She added that those hoping for weak data to prompt a rate cut were disappointed.

This is the first jobs report since US President Donald Trump’s January inauguration, as he pushes for tax cuts, growth and trade tariffs.

The Federal Reserve is watching the data closely after a rate cut in late 2024, with markets expecting no rate changes until at least June.

Despite concerns about the California wildfires, the Bureau of Labor Statistics said they had no significant impact on the jobs total.

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FAQs:

1. What is Nonfarm payrolls?
Nonfarm payrolls refer to the total number of paid workers in the economy, excluding those working in farms, private households, non-profit organisations, and certain government jobs.

2. What is the role of Bureau of Labor Statistics?
The Bureau of Labor Statistics (BLS) is a US government agency that collects, analyses and reports important data about the labour market, working conditions and economy.