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This story in the January jobs report is developing and will be updated with more details.
The US economy posted strong job growth in January as employers hired at a steady pace to start 2026 as the Federal Reserve assesses the need for rate cuts in the coming months.
What is the job report?
On Wednesday the Department of Labor reported that employers added 130,000 jobs in January. This number was higher than the expectations of economists polled by LSEG, who estimated that the economy would add 70,000 jobs.
The unemployment rate was 4.3%, slightly lower than economists’ expectations of 4.4%.
Revised payroll numbers for the previous two months, the November report was down 15,000 from a gain of 56,000 to 41,000; while December earnings were revised down by 2,000 from 50,000 to 48,000.
Combined, employment in November and December was 17,000 jobs lower than previously reported. Those revisions were affected by changes made to the Bureau of Labor Statistics’ (BLS) annual marking process, described below.
The January jobs report was originally scheduled to be released on Friday, Feb. 6, but the partial government shutdown caused the agency to delay it until Wednesday.
Which sectors added or lost the most jobs?
Private payrolls grew by 172,000 jobs in January, above the LSEG estimate of 70,000.
Government payrolls fell by 42,000 jobs in January, with job cuts at the federal (-34,000) and state (-18,000) levels offset by gains among local governments (+10,000). The report indicated that some federal workers who accepted a deferred retrenchment proposal last year have officially left the payrolls, and federal workers are down to 327,000 jobs as of October 2024, a 10.9% decrease.
The manufacturing sector added 5,000 jobs in January, which exceeded the expectations of economists interviewed by LSEG, who estimated a loss of 5,000 jobs.
Health care companies added 82,000 jobs in January, with gains in emergency health care services (+50,000), hospitals (+18,000), and nursing and assisted living facilities (+13,000). The sector’s gains were above the monthly average of 33,000 jobs added per month through 2025.
Construction firms added 33,000 jobs in January, with gains concentrated in nonresidential specialty trade contractors (+25,000). Employment in the construction sector was negligible in 2025.
The financial sector shed 22,000 jobs in January and is set to cut 49,000 jobs from its latest peak in May 2025. Within the sector, insurance carriers and related occupations lost 11,000 jobs in the month.
What does it mean for employees?
The number of long-term unemployed, defined as those who have been out of work for 27 weeks or more, was little changed in January at 1.8 million but was up 386,000 from a year earlier. The long-term unemployed accounted for 25% of all unemployed people in January.
The number of people employed part-time for economic reasons fell by 453,000 to 4.9 million in January, but increased by 410,000 last year. These people could have chosen full-time jobs but held part-time jobs because their hours were reduced, or they could not find full-time jobs.
The labor force participation rate was 62.5% in January and the employment rate was 59.8%, both measures unchanged from last year.
What was the benchmark review?
The Bureau of Labor Statistics (BLS) goes through an annual calibration process to incorporate more accurate data from the state’s quarterly unemployment records and business birth and death records into its estimates.
That process presents a more complete and accurate picture of the labor market than the agency’s monthly survey used to create the jobs report, and serves as a way to reduce non-response and reporting errors that accumulate from month to month.
The BLS publishes its annual benchmark update in the annual January jobs report each year, and this report revised total employment for March 2025 down by 898,000 jobs on a seasonally adjusted basis. On a non-seasonally adjusted basis, the revision was 862,000, or -0.5%, while the overall benchmark revision rate over the past 10 years was 0.2%.
Total nonfarm employment for 2025 was revised up from a gain of 584,000 to 181,000 on a seasonally adjusted basis.
What do the experts say?
“Markets may have expected a drop in today’s numbers after last week’s soft data, but the labor market hit the gas pedal instead. Today’s data shows an acceleration in hiring that was strong enough to drive unemployment low – confirmation of Chairman Powell’s holding pattern,” said Ellen Zentner, chief economist of Morgan Stanley Wealth Management.
“The economy has an anemic demand for workers. This year it may be more similar with the average monthly profit expected to go around 50,000 but as employers increase the average hours worked, especially in areas such as the creation of a small supply of workers,” said Jeffrey Roach, chief economist at LPL Financial.
“Job growth is encouraging, but small businesses are still approaching hiring ethically. They’re not just asking, ‘Can we hire?’ They ask, ‘Should we hire, and where does it bring the most value?’ “We’re seeing a lot of focus on productivity, training and role definition rather than broad expansion,” said Andy Bregezer, head of US regional and small business banking and head of commercial banking at TD.
What does it mean for the Fed and rate cuts?
The Federal Reserve held rates steady at its January meeting after three consecutive cuts of 25 basis points each to close 2025. Policymakers noted that inflation remained “somewhat high” and that the economy was growing at a steady pace, with low levels of job gains but signs that the unemployment rate was stabilizing.
Fed Chairman Jerome Powell explained that with interest rates at their current levels, the central bank is well positioned to “let the data speak to us” as policymakers weigh new inflation and labor market data as they debate possible rate cuts.
The Fed’s next policy meeting is March 17-18, and the market expects the pause in rate cuts to continue. The CME FedWatch tool shows a 94.1% probability of rates being left unchanged in March, up from 79.9% yesterday and 90.6% last week.
