The U.S. added 143,000 jobs in January — fewer than economists expected — while the Bureau of Labor Statistics revised down the number of payrolls created since last March by 589,000 as part of routine annual data adjustments.
Forecasters surveyed by Dow Jones were expecting a gain of 169,000 payrolls, down from 256,000 in December.
Despite the large downward revision, economists have remained generally sanguine about the state of the labor market. The unemployment rate fell slightly to 4%, beating forecasts, and the BLS revised November and December payrolls up by a combined 100,000.
The Bureau of Labor Statistics released an initial estimate last summer that 818,000 fewer jobs were created from March 2023 to March 2024 than initially reported.
Some indicators, like hiring rates and the share of people quitting their jobs, show slower movement in the labor market as employers think twice about staffing up and workers about jumping ship.
But other surveys have suggested employers are optimistic President Donald Trump will establish a more business-friendly environment through tax-cut extensions and deregulation that will ultimately lead to additional workers coming online.
“Hiring intentions have gone up across the board,” said Eric Wallerstein, chief markets strategist at the Yardeni Research consultancy. Trump’s election, he said, has boosted the “animal spirits” that generally signal more economic growth.
Adding to those favorable conditions is an interest-rate environment that is stabilizing. Economists now believe the Federal Reserve is unlikely to dramatically alter interest-rate levels — and even Trump recently said the central bank’s decision in late January to hold rates at their current levels was the right one.
Uncertainty of any kind is among the most feared conditions for businesses, and Wallerstein said there is now widespread agreement that borrowing rates will not move much from here. While that may disappoint consumers who were hoping to pay less on things like credit card and auto loan bills, greater certainty generally supports economic growth.
Separately, Trump’s tariff threats have also caused market turbulence, and some Wall Street analysts have signaled they would revise their economic growth estimates should he begin to fully implement them.
In a research note this week, Gregory Daco, chief economist at EY (formerly Ernst & Young), said GDP could contract by as much as 1.5% this year, with inflation climbing an average of 0.4 additional percentage points, depending on the extent of Trump’s tariff levies.
“Rising trade policy uncertainty will heighten financial market volatility and strain the private sector, despite the administration’s pro-business rhetoric,” Daco wrote.
Meanwhile, given how low hiring rates are and how narrowly job gains are concentrated in a handful of sectors like health care and state and local government, many people looking for jobs are still likely to encounter difficulties.
But overall, official job indicators remain in good shape. Unemployment is relatively low, while labor force participation, or the extent of the population that is active in the workforce, and employment-population ratios are at or near all-time highs.
