US Adds 130,000 Jobs in January, Unemployment Falls

Claudia Sahm, Chief Economist at New Century Advisors, reacts to the January jobs report.

US payrolls rose in January by the most in more than a year and the unemployment rate unexpectedly fell, suggesting the labor market continued to stabilize at the start of 2026.

Employers added 130,000 jobs last month and the unemployment rate declined to 4.3%, according to Bureau of Labor Statistics data out Wednesday. That followed revisions to the prior year, which showed a marked slowdown in hiring. Job gains averaged just 15,000 a month last year, down from the initially reported 49,000 pace.

The report suggests the labor market is finding its footing after a year marked by rising unemployment and minimal hiring. While economists expect hiring to remain generally sluggish in 2026, more clarity around the impact of President Donald Trump’s economic policies and lower borrowing costs could encourage some employers to boost headcount.

The January data reinforces Federal Reserve officials’ inclination to keep interest rates on hold for now. Many traders appeared to push out their timeline for the next rate cut to July from June.

In leaving rates unchanged last month, Chair Jerome Powell cited signs of steadying in the job market.

“Coming off of a hiring recession recession in 2025, this is welcome news,” said Heather Long, chief economist at Navy Federal Credit Union. “I think Fed Chair Powell was right — the labor market appears to be stabilizing.”

Trump praised the numbers in a social media post Wednesday and said the US should have the lowest interest rates globally, adding to previous calls for rate reductions. “GREAT JOBS NUMBERS, FAR GREATER THAN EXPECTED!” he wrote.

With the release of each January employment report, BLS benchmarks payrolls to a more accurate but less timely series called the Quarterly Census of Employment and Wages. That data is based on state unemployment insurance tax records and covers most US jobs.

That adjustment showed job growth was nearly 900,000 lower in the 12 months through March 2025 than initially reported. The figure roughly aligned with what the BLS’s preliminary estimate suggested.

The pickup in January hiring was led by health care, which added the most jobs since 2020 and accounted for the majority of overall job growth in 2025. Construction and professional and business services also added jobs, while manufacturing saw the first monthly gain in employment in more than a year. Federal government payrolls continued to decline.

“It’s great that health care is growing the way it is, but I would feel much better if we were seeing broader strength,” said Laura Ullrich, director of economic research at Indeed Hiring Lab. “It is quite lopsided growth.”

Though layoffs remain generally constrained, there’s been a wave of job-cut announcements by companies like Amazon.com Inc. to United Parcel Service Inc. in recent weeks. And heading into this year, job openings across the economy dropped to the lowest level since 2020. The jobs report is comprised of two surveys, one of businesses — which produces the payrolls figures — and another of households, which is the source of the unemployment rate. Within the household survey, the participation rate — the share of the population that is working or looking for work — edged up to 62.5% in January.

There were other positive aspects, including the biggest drop in people working part-time for economic reasons since June 2022. More workers left their jobs, suggesting some confidence in their ability to find a new one. There was also a notable drop in the number of people out of work for at least 27 weeks.

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