Labor Market Cools as Hiring Slows, But Unemployment Declines
The US job market lost momentum in January 2025, with nonfarm payrolls rising by 143,000, significantly lower than December’s revised 307,000 and below the 169,000 forecast by Dow Jones. Despite the slower job growth, the unemployment rate dipped to 4%, reflecting a mixed outlook for the labor market.
Highlights:
- Weaker-than-expected job growth: Payrolls expanded by 143,000, missing expectations.
- Unemployment rate declines: The jobless rate fell to 4%, indicating labor market resilience.
- Government hiring exceeds forecasts: Public sector payrolls increased by 32,000, surpassing the expected 25,000.
- Labor force participation improves: The participation rate edged up to 62.6%, slightly higher than the 62.5% estimate.
- U-6 unemployment rate stable: The broader measure of underemployment stood at 7.5%, in line with projections.
Benchmark Revisions and Economic Outlook
The Bureau of Labor Statistics (BLS) also made benchmark revisions to 2024 payroll data, adjusting previously reported job gains downward. Analysts suggest that the labor market slowdown could influence Federal Reserve rate decisions in the coming months, especially as President Donald Trump pursues policies centered on tax cuts, trade protectionism, and economic growth.
