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January employment surge eases recession fears
US employers created 130,000 new positions last month, exceeding forecasts and pushing the unemployment rate down to 4.3%, the Labor Department announced Wednesday.
2025 slowdown revised downward
The January uptick follows a sharply weaker 2025, when the economy added only 181,000 jobs-the fewest since the pandemic recovery. Revised figures released Wednesday show last year's gains were even softer than first reported, with 862,000 fewer jobs than initial estimates.
Sector breakdown
Healthcare and construction led January's gains, while federal agencies and financial firms trimmed payrolls. Economists cautioned that the headline number may overstate underlying strength, as most new jobs were concentrated in just a handful of industries.
Wage growth steady
Average hourly earnings climbed 3.7% over the past 12 months, matching December's pace. The increase came as more workers entered the labor force and found jobs, helping drive the unemployment rate down from 4.4% in December.
Policy implications
The White House has attributed the slower hiring pace to reduced immigration, which it says has lowered the number of jobs needed to keep unemployment stable. Many economists support the argument, though President Donald Trump has simultaneously pressed the Federal Reserve to cut interest rates to stimulate growth.
"Today's data shows an acceleration in employment that was strong enough to drive unemployment lower-vindication for Powell's holding pattern."
Ellen Zentner, Morgan Stanley Wealth Management
Caveats remain
Analysts warned that January's figures could be inflated by seasonal adjustments and data quirks. Separate government surveys tracking job openings and hiring plans continue to signal softness. The Labor Department also revised November and December payrolls downward by 17,000 jobs.
Nancy Vanden Houten, lead economist at Oxford Economics, called the report "overstated," noting that the bulk of gains were confined to a few sectors.
