US economy added 130K jobs in January, delayed report shows

The U.S. economy posted solid job growth in January as employers hired at a steady pace to start 2026 as the Federal Reserve evaluates the need for rate cuts in the months ahead.

The Labor Department on Wednesday reported that employers added 130,000 jobs in January. That figure was above the expectations of economists polled by LSEG, who estimated the economy would add 70,000 jobs.

The unemployment rate was 4.3%, slightly lower than economists' expectations of 4.4%.

Revisions were made to the payroll numbers for the prior two months, with November's report down by 15,000 from a gain of 56,000 to 41,000; while December's gains were revised down by 2,000 from a gain of 50,000 to 48,000.

Taken together, employment in November and December was 17,000 jobs lower than previously reported. Those revisions were affected by changes made in the Bureau of Labor Statistics' (BLS) annual benchmarking process, which is outlined below.

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The January jobs report was initially scheduled for release on Friday, Feb. 6, but a brief partial government shutdown caused the agency to delay it until Wednesday.

Private payrolls grew by 172,000 jobs in January, well above the LSEG estimate of 70,000.

Government payrolls declined by 42,000 jobs in January, with job cuts at the federal (-34,000) and state (-18,000) level partially offset by a gain among local governments (+10,000). The report noted that some federal workers who accepted a deferred resignation offer last year officially left federal payrolls, while the federal government's workforce is down 327,000 jobs since its October 2024 peak, a decline of 10.9%.

The manufacturing sector added 5,000 jobs in January, beating the expectations of the economists polled by LSEG, who estimated a loss of 5,000 jobs.

Healthcare companies added 82,000 jobs in January, with gains in ambulatory healthcare services (+50,000), hospitals (+18,000), and nursing and residential care facilities (+13,000). The sector's gains were above its monthly average of 33,000 jobs added per month in 2025.

Construction firms added 33,000 jobs in January, with the gain focused among nonresidential specialty trade contractors (+25,000). Employment in the construction sector was essentially flat in 2025.

The financial sector shed 22,000 jobs in January and is 49,000 jobs off its recent peak in May 2025. Within the sector, insurance carriers and related activities lost 11,000 jobs over the month.

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The number of long-term unemployed, defined as those who have been jobless for 27 weeks or more, was little changed in January at 1.8 million but is up 386,000 from a year ago. The long-term unemployed accounted for 25% of all unemployed people in January.

The number of people who were employed part-time for economic reasons decreased by 453,000 to 4.9 million in January, but is up 410,000 over the last year. These individuals would've preferred full-time jobs but were working part-time because their hours were cut, or they were unable to find full-time jobs.

The labor force participation rate was 62.5% in January while the employment-population ratio was 59.8%, both measures having changed little over the last year.

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The Bureau of Labor Statistics (BLS) goes through a benchmarking process every year to incorporate more accurate data from state unemployment records that are published quarterly along with business birth and death records into its estimates.

That process yields a more complete and accurate picture of the labor market than the agency's monthly surveys that are used to create the jobs report, and serves as a means of mitigating the non-response and reporting errors that accumulate month-to-month.

BLS publishes its annual benchmark revision with each year's January jobs report, and this report revised total employment for March 2025 downward by 898,000 jobs on a seasonally adjusted basis. On a non-seasonally adjusted basis, the downward revision was 862,000, or -0.5%, while the absolute average benchmark revision over the last 10 years was 0.2%.

Total nonfarm employment for 2025 was revised from a gain of 584,000 to 181,000 on a seasonally adjusted basis. That reduced average monthly job gains from an average of over 48,000 to just over 15,000 per month.

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"Markets may have been expecting a downshift in today's numbers after last week's soft data, but the jobs market hit the gas pedal instead. Today's data shows an acceleration in employment that was strong enough to drive unemployment lower – vindication for Chair Powell's holding pattern," said Ellen Zentner, chief economic strategist for Morgan Stanley Wealth Management.

"The economy has an anemic demand for workers. This year may be more of the same with average monthly payroll gains expected to hover around 50,000 but with employers increasing average hours worked, especially in areas like construction with low availability of workers," said Jeffrey Roach, chief economist at LPL Financial.

"Job growth is encouraging, but small business owners are still approaching hiring with discipline. They're not just asking, ‘Can we hire?’ They're asking, ‘Should we hire, and where does it drive the most value?’ We're seeing more focus on productivity, training, and role clarity instead of broad expansion," said Andy Bregenzer, head of U.S. regional and small business banking and co-head of commercial bank at TD.

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The Federal Reserve held rates steady at its January meeting after three consecutive cuts of 25 basis points each to close out 2025. Policymakers noted that inflation remains "somewhat elevated" and that the economy was expanding at a solid pace, with low levels of job gains but signs of the unemployment rate stabilizing.

Fed Chair Jerome Powell explained that with interest rates at their current level, the central bank is well-positioned to "let the data speak to us" as policymakers weigh fresh inflation and labor market data as they debate potential rate cuts.

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The Fed's next policy meeting is March 17-18, and the market anticipates the pause on rate cuts will continue. The CME FedWatch tool shows a 94.1% probability of rates being left unchanged in March, up from 79.9% yesterday and 90.6% a week ago.