U.S. employers added a surprisingly strong 130,000 jobs last month, but government revisions cut 2024-2025 U.S. payrolls by hundreds of thousands.
The unemployment rate fell to 4.3%, the Labor Department said Wednesday.
The report included major revisions that reduced the number of jobs created last year to just 181,000, weakest since the pandemic year of 2020, and less than half the previously reported 584,000.
The job market has been sluggish for months even though the economy is registering solid growth.
But the January numbers came in stronger than the 75,000 economists had expected. Healthcare accounted for nearly 82,000, or more than 60%, of last month’s new jobs. Factories added 5,000, snapping a streak of 13 straight months of job losses. The federal government shed 34,000 jobs.
Average hourly wages rose a solid 0.4% from December to January.
The unemployment rate fell from 4.4% in December as the number of employed Americans rose and the number of unemployed fell.
Weak hiring over the past year reflects the lingering impact of high interest rates, billionaire Elon Musk’s purge last year of the federal workforce and uncertainty arising from President Donald Trump’s erratic trade policies, which have left businesses unsure about hiring.
Dreary numbers have been coming in ahead of Wednesday’s report. Employers posted just 6.5 million job openings in December, fewest in more than five years.
Payroll processor ADP reported last week that private employers added 22,000 jobs in January, far fewer than economists had forecast. And the outplacement firm Challenger, Gray & Christmas reported that companies slashed 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 is cutting 30,000 jobs. Chemicals giant Dow, shifting to more automation and artificial intelligence, is cutting 4,500 jobs. And Amazon is slashing 16,000 corporate jobs, its second round of mass layoffs in three months.
The sluggish job market doesn’t match the economy’s performance.
From July to September, America’s gross domestic product—its output of goods and services—galloped ahead at a 4.4% annual pace, fastest in two years. Consumer spending was strong, and growth got a boost from rising exports and tumbling imports. And that came on top of solid 3.8% growth from April through June.
Economists are puzzling out whether job creation will eventually accelerate to catch up to strong growth, perhaps as President Donald Trump’s tax cuts translate into big tax refunds that consumers start spending this year. But there are other possibilities. GDP growth could slow and fall into line with a weak labor market or advances in AI and automation could mean that the economy can roar ahead without creating many jobs.
Wednesday’s report included the government’s annual benchmark revisions, meant to take into account the more-accurate jobs numbers that employers report to state unemployment agencies. They cut 898,000 jobs from payrolls in the year ending March 2025.
Despite recent high-profile layoffs, the unemployment rate has looked better than the hiring numbers.
That is 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 that the economy needs to create to keep the unemployment rate from rising—the “break-even” point—has tumbled. In 2023, when immigrants were pouring into the United States, it reached a high of 250,000, according to economist Anton Cheremukhin of the Federal Reserve Bank of Dallas. By mid-2025, Cheremukhin found, it was down to 30,000. Researchers at the Brookings Institution believe it could now be as low as 20,000 and headed lower.
The combination of weak hiring but low unemployment means that most American workers are enjoying job security. But those who are looking for jobs—especially young people who can be competing at the entry level with AI and automation—often struggle to land one.
—Paul Wiseman, AP Economics Writer