U.S. job creation accelerated in January, with nonfarm payrolls increasing by 130,000 jobs, and the unemployment rate falling to 4.3% from 4.4% in December, according to data released Wednesday by the Bureau of Labor Statistics.
The January payroll gain followed a downwardly revised 48,000 increase in December. Economists polled in advance had expected payrolls to climb by 70,000. Individual estimates extended from a loss of 10,000 jobs to a gain of 135,000 positions.
Seasonal hiring dynamics
Part of January's better-than-anticipated payroll showing reflected calendar and seasonal anomalies. Retailers and delivery companies, which are usually significant hirers around the holidays, recruited fewer temporary workers than is typical in the prior year. Because January is generally the largest month for holiday-related layoffs, the reduced seasonal hiring in the prior period likely meant fewer layoffs occurred in January, thereby lifting payroll growth for the month.
Policy and political headwinds
Trade policy continued to loom over labor-market sentiment. The report highlighted a recent episode in which the President threatened additional tariffs on European allies over a dispute tied to Greenland, and then abruptly reversed course. The episode was cited in the context of trade-policy uncertainty that observers say has clouded the labor market.
Data timing and methodological changes
The publication of the employment report was delayed by three days because of a short federal government shutdown. Effective with the January report, the BLS implemented an update to its birth-and-death model, bringing current sample information into the model each month. The birth-and-death model is used to estimate job gains or losses associated with business openings and closures; it has been criticized in the past for contributing to an overcount of payrolls.
Economists estimate that the update to the birth-and-death methodology - a change that follows the approach applied to April-October 2024 estimates after the annual benchmark payrolls revision - could result in as many as 50,000 fewer jobs being added to recent payroll growth figures than previously reported.
Labor-market tone and public sentiment
Despite the January uptick in payrolls, the report characterized the labor market as lackluster, noting it has struggled even as the broader economy recorded robust growth. The combination of concerns about job prospects and elevated inflation has eroded public approval of the President's handling of the economy, according to the reporting.
Economists cited the administration's trade and immigration policies as factors that have chilled the labor market, while also noting expectations that planned tax cuts could support hiring later in the year.
Monetary policy backdrop
The Federal Reserve, which last month left its benchmark overnight interest rate in a 3.50% to 3.75% range, will monitor incoming labor-market and inflation data as it assesses whether to change that stance. The January report - showing stable job creation and a modest decline in unemployment - could provide policymakers room to hold rates steady for some time while watching inflation developments.
Labor force growth and population controls
White House economic adviser Kevin Hassett cautioned earlier in the week that slower labor force growth could translate into lower job gains in coming months. The Census Bureau reported that the nation's population rose by 1.8 million people, or 0.5%, to 341.8 million in the year ending June 2025.
The Bureau of Labor Statistics will introduce new annual population controls for the household survey with February's employment report after those controls were delayed by last year's 43-day government shutdown. The population-control adjustments account for updated population estimates, including migration. The unemployment rate is derived from the household survey.
Given the recent reduction in the labor force, economists in the report said the economy may need to add roughly 50,000 jobs per month or even fewer to keep pace with growth in the working-age population.
Note: This article reports the BLS employment figures, methodological updates, policy commentary, and population data exactly as presented in the January employment release and related commentary.