Employers Added Fewer Jobs Than Expected In January

Key Takeaways

• U.S. employers added 143,000 jobs in January, the slowest job growth since October, while the unemployment rate declined to 4% from 4.1% in December.
• The job slowdown is unlikely to influence the thinking of officials at the Federal Reserve, who are not feeling any pressure to boost the economy by chopping borrowing costs.
• The job market has settled into a groove of relatively slow hiring, and low unemployment.

The job market settled further into its low hiring, low firing groove in January as employers added the fewest people to their payrolls since October, while unemployment unexpectedly declined.

U.S. employers added 143,000 jobs in January, the Bureau of Labor Statistics said Friday. That was a slowdown from 307,000 jobs added in December and short of the 169,000 forecasters had expected, according to a survey of economists by Dow Jones Newswires and The Wall Street Journal. Meanwhile, the unemployment rate fell to 4% from 4.1% in December, hitting its lowest since May. The median forecast called for the rate to hold steady.

The data showed recent trends in the job market intensifying. For months, employers have avoided both hiring and layoffs, and job growth has slowed significantly since the post-pandemic explosion of demand for workers that made hiring and wages spike in 2022. Despite slower hiring, the job market has stayed resilient, and the unemployment rate has hovered at levels that aren’t high by historical standards.

“Job gains were a little soft in January, but a big picture view on the U.S. labor market suggests it remains on very solid footing,” Ali Jaffery, an economist at CIBC Capital Markets, wrote in a commentary.

Job growth may have been slowed by one-time factors such as the wildfires in California, and a streak of unusually cold weather, Lindsay Rosner, head of multi sector fixed income investing at Goldman Sachs Asset Management, wrote in a commentary.

The job slowdown likely wasn’t severe enough to pressure officials at the Federal Reserve to cut interest rates anytime soon, Rosner wrote. The Fed has been keeping rates at unusually high levels, pushing up borrowing costs for all kinds of loans in an effort to slow down inflation that’s still painful for household budgets.

Financial markets anticipate the Fed will cut rates at some point this year if inflation resumes cooling toward the Fed’s goal of a 2% annual rate or the labor market shows signs of distress. Congress tasks the Fed with keeping inflation low and employment high.

Correcting The Record

Friday’s report also incorporated several revisions, one affecting data for this month and another changing the historical record. The bureau finalized revisions to the job data between March 2023 and March 2024, downwardly revising the number of jobs added by 589,000. That was smaller than a preliminary version of the revisions released last year, which trimmed job growth by 818,000 over that period.

A second revision changed the size of the population as well as the labor force, adding 2.9 million people, 2.1 million of whom were part of the labor force in January, who were previously unaccounted for. The change was due to new data from the Census changing the estimates for the number of immigrants who recently arrived in the country. As a result, the unemployment rate and the labor force participation rate were bumped up 0.1 percentage point above what they otherwise would have been, the bureau said.