Washington (United States) (AFP) – US job growth beat expectations in January while unemployment crept down, official data showed Wednesday, defying immediate concerns about labor market fragility on the back of President Donald Trump’s economic policies. The United States added 130,000 jobs last month, the Department of Labor said, significantly above the 55,000 predicted in surveys by Dow Jones Newswires and The Wall Street Journal. This was also the biggest monthly gain since late 2024. The jobless rate inched lower to 4.3 percent from 4.4 percent in December.
Trump swiftly lauded the “great jobs numbers” in a Truth Social post, reiterating his push for lower interest rates. But revisions to 2025 figures indicated that the world’s biggest economy added significantly fewer jobs than earlier estimated for all of last year, averaging 15,000 per month rather than 49,000. Moody’s Analytics chief economist Mark Zandi warned this week that Trump’s economic policies have driven a “dramatic slowdown in job growth” overall. This is partly due to highly restrictive immigration policy — hitting labor supply — while labor demand has also been impacted as tariffs and government job cuts take a toll on industries.
White House officials had tried to get ahead of Wednesday’s report and manage expectations about job creation, citing rising productivity from artificial intelligence advancements. White House National Economic Council director Kevin Hassett told CNBC at the start of the week that “you should expect slightly smaller job numbers that are consistent with high GDP growth right now.” “One shouldn’t panic if you see a sequence of numbers that are lower than you’re used to,” he added, pointing to cooling population growth but “skyrocketing” productivity growth.
This has not stopped Democratic Senator Elizabeth Warren from taking aim at the Trump administration Wednesday, saying that the president’s economic agenda “absolutely hammered the labor market in 2025.”
– ‘Extended’ Fed pause –
For now, the government data — which were slightly delayed by last week’s federal shutdown — suggest the labor market is showing more underlying resilience than anticipated. This provides support for Federal Reserve officials who have voted to keep interest rates unchanged for the time being, said Mortgage Bankers Association chief economist Mike Fratantoni. While the US central bank made three consecutive rate cuts last year, Fed officials kept rates unchanged in January and are widely expected to keep doing so until June as they assess the economy’s health. “An extended pause still seems likely,” said Nationwide economist Oren Klachkin of the Fed’s upcoming rate decisions. He noted that policymakers’ comments point toward patience and that the economy is chugging along.
But Fratantoni flagged that “job gains continue to be focused in just a few sectors, matching the uneven pace of economic growth we are seeing in many data releases.” Industries such as health care, social assistance, and construction saw job gains in January, while losses took place in sectors like the federal government and financial activities. “Since reaching a peak in October 2024, federal government employment is down by 327,000, or 10.9 percent,” said the Labor Department.
“The surprisingly strong job gains in January were driven mainly by health care and social assistance,” said Navy Federal Credit Union chief economist Heather Long. She added, however, that this is “enough to stabilize the job market and send the unemployment rate slightly lower.” “This is still a largely frozen job market, but it is stabilizing,” she said. “That’s an encouraging sign to start the year.”
© 2024 AFP
