US Job Growth Surges to 130,000 in January as Unemployment Rate Dips to 4.3%

The U.S. Labor Department reported Wednesday that employers added 130,000 jobs in January, significantly exceeding economist forecasts that ranged from 55,000 to 75,000. The unemployment rate fell to 4.3% from 4.4% in December, defying expectations that it would remain unchanged. While the monthly figure suggests a stabilizing labor market, the report included substantial downward revisions to 2025 data. Total job growth for last year was adjusted to 181,000, down from the previously reported 584,000, marking the weakest annual performance since the 2020 pandemic.

January's gains were heavily concentrated in specific sectors, with healthcare adding 82,000 positions and social assistance adding 42,000. Construction also saw a rise of 33,000 jobs, which some economists attributed to the development of data centers for artificial intelligence. Conversely, the federal government shed 34,000 positions, continuing a trend of contraction following deferred resignations in 2025, and the financial sector lost 22,000 jobs. Manufacturing saw a slight rebound of 5,000 positions, its first increase since late 2024.

Financial markets reacted with volatility as investors weighed the stronger-than-expected hiring against the potential for the Federal Reserve to maintain current interest rates. Major stock indexes initially rose to record levels before fluctuating; the Dow Jones Industrial Average and Nasdaq composite both ended the morning lower. Specific stocks saw significant movement, with Exxon Mobil rising 3.3% and Smurfit Westrock jumping 9.9%, while Moderna fell 8.8% following a vaccine application refusal by the FDA. Treasury yields increased, with the two-year yield rising to 3.50% as traders reduced expectations for a March interest rate cut.

President Donald Trump praised the report on social media, describing the figures as a sign of economic strength and renewing calls for the Federal Reserve to lower borrowing costs. However, some economists and Federal Reserve officials expressed caution. Fed Governor Chris Waller noted that the massive 2025 revisions indicate a less healthy labor market than previously assumed, suggesting that employers remain reluctant to hire amid uncertainty over trade and immigration policies. Average hourly earnings rose 0.4% for the month and 3.7% on an annual basis, which remains a key metric for the Fed as it monitors inflation.