Job Growth Cools but Stays Strong – 143K New Hires!
The U.S. job market kept moving in January, though at a slower pace. The economy added 143,000 jobs, while the unemployment rate dipped to 4%, according to the Labor Department. Though job growth cooled from November and December—and fell short of the 169,000 jobs expected—revisions to the previous two months added 100,000 more jobs than initially reported.
Despite the slowdown, economists say the report signals a still-solid labor market. “The softer 143,000 gain in payrolls is nothing to worry about,” said Stephen Brown of Capital Economics.
Key Takeaways:
📉 Stock markets fell, with the Dow and S&P 500 dropping about 1%.
🏥 Healthcare, retail, and government saw job gains, while mining and oil & gas lost jobs.
📊 Prime-age employment (25-54 years old) ticked up to 80.7%, signaling strong workforce participation.
Political & Economic Shifts Ahead
This was the final jobs report of the Biden era, coming as President Trump’s new policies take shape. His plans to cut immigration and launch mass deportations could shrink the labor force, JPMorgan analysts warn. New tariffs on China, Canada, Mexico, and the EU could also impact hiring and economic growth.
Meanwhile, Trump promises tax cuts and factory investment to boost manufacturing jobs. Whether these policies fuel job creation or economic uncertainty remains to be seen.
Stay tuned—February’s job report could bring big changes.
What This Means for the Fed
The January jobs report isn’t likely to push the Federal Reserve toward an immediate interest rate cut. The Fed remains in wait-and-see mode, focusing on whether inflation continues to cool rather than worrying about labor market-driven inflationary pressures.
A faster slowdown in job growth could spark fresh discussions about rate cuts, especially if economic activity weakens significantly. For now, officials are comfortable taking a reactive approach, waiting for first-quarter inflation data to see if it stabilizes after past years of early-year spikes.
Wages & Buying Power Stay Strong
Worker wages grew faster than expected and continued to outpace inflation, meaning Americans’ purchasing power is still rising.
Wildfires & Winter Weather Had Little Impact—For Now
Despite Los Angeles wildfires and a cold January, the Labor Department said these events didn’t significantly affect job numbers. However, some economists believe otherwise, citing:
❄️ A dip in leisure & hospitality jobs
🏗️ Only a small increase in construction employment
Looking ahead: Economists, including Indeed’s Cory Stahle, predict the fires may impact future job reports. Goldman Sachs noted that 0.5% of California’s population faced evacuation orders, which could disrupt employment in the coming months.
Revising the Numbers: What Changed?
Friday’s report included annual revisions to past job data, revealing a mixed picture of the labor market.
📉 Fewer jobs were created in the year through March 2024 than previously reported.
📈 More Americans were employed than earlier estimates suggested.
The total job count for the year ending March 2024 was revised down by 598,000 (0.4%), though this drop was smaller than the 818,000 decline projected in an earlier August estimate.
Why Do These Numbers Change?
When payroll data is first released, it’s based on surveys from employers. Later, the Labor Department revises the numbers using county wage and employment records,
which provide a more complete picture.
A separate revision found that in December, there were:
🔹 2 million more employed people than previously reported
🔹 105,000 more unemployed individuals actively seeking work
The Census & Immigration Effect
The Labor Department relies on Census Bureau estimates for employment levels. In December, the Census Bureau raised its population estimates, reflecting the surge in immigration since 2021.
Despite this, January’s unemployment rate still fell to 4%, signaling a strong labor market.
🔹 Josh Hirt, senior U.S. economist at Vanguard, noted that even with a larger labor force, job growth outpaced population adjustments, reinforcing the economy’s resilience.
Nick Timiraos contributed to this article.