U.S. Adds 130,000 Jobs in January as Benchmark Revisions Rewrite 2025 Hiring

The U.S. economy added 130,000 jobs in January and the unemployment rate edged down to 4.3%, an unexpectedly solid start to 2026 that arrived alongside major revisions showing that hiring nearly flatlined last year.

The Labor Department’s monthly Employment Situation report, released Feb. 11 after a shutdown-related delay, suggests the labor market is cooling from its post-pandemic surge but has not tipped into recession. It also significantly rewrites the story of 2025, which now appears to have been the weakest year for job growth since the pandemic recovery began.

In benchmark revisions, the Bureau of Labor Statistics (BLS) cut its estimate of total job gains in 2025 to 181,000—about 15,000 per month on average—down from an earlier estimate of 584,000. Those changes, based on more complete payroll tax records, mean the nation added fewer jobs in all of 2025 than it did in a single typical month earlier in the expansion.

“Total nonfarm payroll employment rose by 130,000 in January, and the unemployment rate changed little at 4.3 percent,” the BLS said in its news release. It added that job gains occurred in health care, social assistance and construction, while federal government and financial activities lost jobs.

The January numbers landed as the Federal Reserve weighs when to begin cutting interest rates, and as President Donald Trump’s second-term economic record takes clearer shape ahead of the 2026 midterm elections.

Jobs beat expectations, wages outpace inflation

Economists had generally expected a modest gain of around 55,000 to 65,000 jobs in January and an unemployment rate of 4.4%. Instead, employers added roughly twice as many jobs as forecast, and the jobless rate ticked down a tenth of a percentage point from December.

Average hourly earnings for all private-sector workers rose 0.4% in January and were up 3.7% over the past 12 months, to $37.17. Consumer prices increased 2.4% over the same period, according to the separate Consumer Price Index report, implying that inflation-adjusted pay has risen by roughly 1% to 1.3% over the year.

For many households, that means paychecks are finally growing faster than prices after several years when inflation often outpaced wage gains. Still, the unemployment rate is higher than the 4.0% recorded a year earlier, and measures of labor market slack show ongoing strain. About 1.8 million people had been unemployed for 27 weeks or more in January, making up a quarter of all jobless workers, and some 4.9 million people were working part time for economic reasons.

Job growth shifts toward health care and social services

Beneath the headline figures, January’s report underscores how the composition of job growth is shifting toward the care economy.

Health care employers added 82,000 jobs in January, including increases at doctors’ offices, hospitals and nursing and residential care facilities. Social assistance payrolls rose by 41,600, led by individual and family services and child care.

Construction employment increased by 33,000, with particular strength among nonresidential specialty trade contractors. Professional and business services added about 34,000 jobs, including gains in administrative and temporary help services. Manufacturing employment, often watched as an indicator of industrial activity, was described as “little changed” but edged up by 5,000 jobs.

Those gains were partly offset by losses in several white-collar and public-sector categories. Financial activities shed 22,000 jobs, continuing a gradual decline from a peak in mid-2025. Information employment fell by around 12,000, including cuts in telecommunications. Transportation and warehousing payrolls also declined by about 11,000.

Government employment dropped by 42,000 in January, driven by a 34,000 decrease at the federal level and an 18,000 decline in state government, partly offset by a 10,000 gain in local government jobs.

Since October 2024, federal employment has fallen by roughly 10% to 11%, according to Labor Department data. Elise Gould, a senior economist at the Economic Policy Institute, called the contraction “alarming,” saying federal employment has “shrunk an alarming 324,000 jobs since January 2025,” and that “the cost of these losses are only beginning to be felt.”

Administration officials have argued that reducing the size of the federal workforce is a deliberate effort to pare back bureaucracy. Critics say the cuts risk undermining the government’s ability to administer tariffs, enforce regulations and manage programs ranging from health care to border security.

Revisions expose a near-stall in 2025 hiring

The annual benchmark revisions released with the January report were unusually large. Using comprehensive unemployment insurance records from the Quarterly Census of Employment and Wages, the BLS lowered its estimate of seasonally adjusted total nonfarm employment in March 2025 by 898,000 jobs.

As a result, the agency now estimates that employers added just 181,000 jobs over the course of 2025, compared with the 584,000 previously reported. On a monthly basis, that translates to about 15,000 new jobs a month—far below the 30,000 to 50,000 range many analysts had believed.

The revisions confirm what some regional Federal Reserve banks had described as a “low hire, low fire” labor market in 2025: employers were slow to add workers but also reluctant to conduct large-scale layoffs, keeping unemployment roughly stable even as net job creation faded.

Routine revisions to the most recent months were smaller but still pointed in the same direction. November’s job gain was revised down to 41,000 from 56,000, and December’s to 48,000 from 50,000.

The new data also highlight the challenges of real-time measurement. An independent report from payroll processor ADP estimated that private-sector employment increased by just 22,000 jobs in January, compared with the Labor Department’s estimate of a 172,000 gain in private payrolls. Economists often use ADP as a rough guide, but the widening gap has sparked debate over sampling and seasonal adjustment methods.

Fed gets room to wait on rate cuts

For the Federal Reserve, the combination of moderate job growth, low but positive real wage gains and easing inflation reinforces a cautious stance on interest rates.

Fed Chair Jerome Powell and his colleagues left the benchmark federal funds rate unchanged at their January policy meeting and have signaled they want more evidence that inflation will remain near the central bank’s 2% target before cutting borrowing costs.

Analysts said the January employment report reduces the urgency for early or aggressive cuts. Futures markets now put overwhelming odds on the Fed holding rates steady at its March meeting, with the first reduction not fully expected until June. Economists at major banks said the data support the case for only a small number of rate cuts in the second half of the year.

Stock futures rose after the report, as investors took the stronger jobs data and cooling inflation as signs the economy can avoid a sharp downturn. Yields on U.S. Treasury securities moved higher, reflecting diminished expectations for rapid rate cuts.

Racial gaps and public sentiment persist

Despite the relatively benign aggregate numbers, the report shows longstanding disparities. In January, the unemployment rate for white workers was 3.7%, compared with 7.2% for Black workers and 4.7% for Hispanic and Latino workers. Teen unemployment fell but remained elevated at 13.6%.

The employment-population ratio, which measures the share of working-age people who are employed, stood at 59.8% and has changed little over the past year. The labor force participation rate was 62.5%, also essentially flat.

At the same time, surveys show consumer sentiment remains weak by historical standards. Many households continue to focus on elevated price levels for rent, food and services compared with before the COVID-19 pandemic, even as the pace of inflation slows and wages outpace it on average.

Those cross-currents—a labor market that appears to be cooling but not collapsing, real wage gains that have only recently turned positive, and uneven progress across demographic groups—set the stage for competing political narratives.

The Trump administration is likely to highlight January’s stronger-than-expected job growth, low unemployment by historical norms and rising real pay. Opponents are expected to point to the revised record of 2025 as the slowest year for job creation since 2020, as well as deep cuts to the federal workforce and persistent racial gaps.

Whether January marks the beginning of a more durable pickup in hiring or a temporary bright spot after a stagnant year will become clearer in the months ahead. For now, the data depict an economy still adding jobs, reshaped by the growth of health and social care work and a smaller federal government, even as many Americans remain unconvinced that conditions on the ground are improving.