Job creation was lower than expected in January, though the unemployment rate edged down and worker wages rose sharply, the Bureau of Labor Statistics reported Friday.
Nonfarm payrolls climbed by a seasonally adjusted 143,000 for the month, down from an upwardly revised 307,000 in December and below the 169,000 forecast from Dow Jones. The unemployment rate nudged lower to 4%.
The report also featured significant benchmark revisions to the 2024 totals that saw substantial downward changes to the previous payrolls level though upward revisions to those who reported holding jobs.
The revisions, which the BLS does each year, reduced the jobs count by 589,000 in the 12 months through March 2024. A preliminary adjustment back in August 2024 had indicated 818,000 fewer jobs.
The level of those reporting at work, as computed in the household survey, soared by 2.23 million, the product of annual adjustments for population and immigration in the country. The household survey happens separately from the establishment survey used to tally total jobs.
Job growth for January was concentrated in health care (44,000), retail (34,000) and government (32,000). The total gain for the month was slightly off the average 166,000 in 2024, the BLS said. Social assistance added 22,000, while mining-related industries lost 8,000.
Along with the upward revision to the December count, the BLS took up the November total to 261,000, a change of 49,000. The two months together saw upward revisions of 100,000.
The unemployment rate moved lower as labor force participation increased, rising to 62.6%, up 0.1 percentage point from December. A broader measure that includes discouraged workers as well as those holding part-time jobs for economic reasons held steady at 7.5%.
While job gains were muted, wages rose more than expected: Average hourly earnings increased 0.5% for the month and 4.1% from a year ago, compared with respective estimates for 0.3% and 3.7%.
Markets showed little reaction to the report, with stock market futures around flat and Treasury yields higher.
“A lower-than-expected January payrolls number was more than offset by upward revisions to November and December’s totals and a downtick in the unemployment rate,” said Ellen Zentner, chief economic strategist at Morgan Stanley Wealth Management. “Those who’d hoped for a soft report that would nudge the Fed back into rate-cutting mode didn’t get it.”
The report is the first jobs count since President Donald Trump took office on Jan. 20 with plans to cut taxes, boost growth and level the global playing field on trade by slapping heavy tariffs on the biggest U.S. trading partners.
Federal Reserve officials are watching the numbers closely as they contemplate their next monetary policy moves. The Fed cut its benchmark rate by a full percentage point in the latter part of 2024, but policymakers of late have been advocating a more cautious pace ahead as they evaluate policy ramifications.
Markets expect the Fed to stay on hold until at least June, with a second cut down to about a 50-50 chance, according to futures pricing measured by the CME Group.
While some economists had expected that the California wildfires would reduce the job count, the bureau said they “had no discernible effect” on the total.
Correction: The unemployment rate fell to 4% in January. The headline on an earlier version misstated the move.
