US adds surprising 130,000 jobs last month yet revisions cut hundreds of thousands of jobs last year
WASHINGTON– U.S. employers added a surprisingly strong 130,000 jobs last month, but government revisions cut U.S. payrolls by hundreds of thousands for 2024-25.
The unemployment rate fell to 4.3%, the Labor Ministry announced on Wednesday.
The report included major revisions that reduced the number of jobs created last year to just 181,000, the lowest since the pandemic year of 2020, and less than half of the 584,000 previously reported.
The job market has been slow for months, even though the economy is growing solidly.
But the January figures turned out to be higher than what the 75,000 economists expected. Health care accounted for nearly 82,000, or more than 60 percent, of new jobs last month. Factories added 5,000, ending a 13-month streak of job losses. The federal government has cut 34,000 jobs.
The average hourly wage increased by a solid 0.4% from December to January.
The unemployment rate fell from 4.4% in December as the number of employed Americans increased and the number of unemployed fell.
Weak hiring over the past year reflects the lingering impact of high interest rates, last year’s purge of billionaire Elon Musk from the federal workforce and uncertainty stemming from President Donald Trump’s erratic trade policies, which have left businesses uncertain about hiring.
Gloomy figures were released ahead of Wednesday’s report. Employers posted only 6.5 million job openings in December, the lowest figure in more than five years.
Payroll processor ADP reported last week that private employers added 22,000 jobs in January, far fewer than economists expected. And the outplacement firm Challenger, Gray & Christmas reported that businesses cut more than 108,000 jobs last month, the most since October and the worst January for job cuts since 2009.
Several well-known companies announced layoffs last month. UPS cuts 30,000 jobs. Chemical giant Dow, which is moving towards more automation and artificial intelligence, is cutting 4,500 jobs. And Amazon is cutting 16,000 corporate jobs, its second wave of mass layoffs in three months.
The weakness of the labor market does not correspond to the performance of the economy.
From July to September, U.S. gross domestic product – its production of goods and services – grew at an annual rate of 4.4%, the fastest in two years. Consumer spending was strong and growth was driven by rising exports and falling imports. And that comes on top of a solid 3.8% growth from April to June.
Economists wonder whether job creation will eventually accelerate to catch up with strong growth, perhaps as President Donald Trump’s tax cuts translate into large tax refunds that consumers begin spending this year. But there are other possibilities. GDP growth could slow and align with labor market weakness or advances in AI and automation could allow the economy to grow without creating many jobs.
Wednesday’s report included the government’s annual benchmark revisions, intended to take into account the more accurate employment figures that employers report to state unemployment agencies. They cut 898,000 jobs in the year ending March 2025.
Despite recent high-profile layoffs, the unemployment rate looks better than the hiring numbers.
That’s partly because President Donald Trump’s immigration crackdown has reduced the number of foreign-born people competing for work.
As a result, the number of new jobs the economy must create to keep the unemployment rate from rising — the “break-even point” — has fallen: In 2023, when immigrants flocked to the United States, that number peaked at 250,000, according to economist Anton Cheremukhin of the Federal Reserve Bank of Dallas. The Brookings Institution estimates it could now be as low as 20,000 and continuing to fall.
The combination of low hiring and low unemployment means that most American workers enjoy job security. But those looking for jobs – especially young people who can compete with AI and automation at the entry level – often struggle to land one.
