U.S. added 130k jobs in January, but revised data shows 2025 was a bust

January hiring beat expectations, but there’s a catch

U.S. employers added 130,000 jobs in January 2026, nearly double what economists had predicted. Most forecasters expected roughly 55,000 to 75,000 new jobs.

The gain marked the strongest month of hiring since December 2024 and a big jump from December’s modest 48,000.

The Bureau of Labor Statistics delayed the report about five days because of a partial government shutdown that began Jan. 31.

Unemployment rate dipped to 4.3%

The unemployment rate fell to 4.3 percent from 4.4 percent in December, beating expectations that it would hold steady.

A broader measure that counts discouraged workers and people stuck in part-time jobs because they cannot find full-time work dropped to 8.0 percent, down four-tenths of a point from December.

The labor force participation rate also ticked up to 62.5 percent, a sign that more Americans started looking for work.

Health care drove most of the gains

Health care added about 82,000 jobs in January, making up more than 60 percent of all new hiring.

Ambulatory services led the way with about 50,300 new positions, followed by hospitals at 18,300 and nursing and residential care at 13,300. Social assistance added another 42,000 jobs.

Together, health care and social assistance accounted for nearly all net job creation. Health care has driven most U.S. job growth for over a year, fueled in part by an aging population.

Construction and manufacturing also gained

Construction added 33,000 jobs, led by nonresidential specialty trade contractors. The sector had stayed essentially flat throughout 2025, so the jump stood out.

Some of the gains likely reflect demand from data center building. Manufacturing added 5,000 jobs, breaking a streak of 13 straight months of losses.

Economists had predicted the sector would lose 5,000 jobs, making the turnaround even more notable.

The federal government continued to shed jobs

Federal government employment fell by 34,000 in January.

Some federal workers who accepted deferred resignation offers through the Department of Government Efficiency officially left payrolls.

Since its peak in October 2024, federal employment has dropped by 327,000, a decline of about 10.9 percent. State government jobs fell by 18,000, while local government added 10,000.

Overall, government payrolls shrank by 42,000.

The financial sector also lost jobs

Financial activities employment fell by 22,000 in January. The sector has now lost 49,000 jobs since hitting a recent peak in May 2025.

Insurance carriers and related activities accounted for about 11,000 of the January losses.

Meanwhile, retail trade and leisure and hospitality each added only about 1,000 jobs, offering little help to offset the financial sector’s decline.

Wages rose more than expected

Average hourly earnings climbed 0.4 percent from December to January, one-tenth of a point above what economists predicted. Year over year, wages grew 3.7 percent, matching forecasts.

Average hourly earnings reached $37.17, and the average workweek edged up by one-tenth of an hour to 34.3 hours.

Wage growth at this pace may support real income gains for workers, but the Federal Reserve watches it closely for signs of inflation pressure.

Revisions showed 2025 was much weaker

Annual benchmark revisions told a very different story about 2025.

The Bureau of Labor Statistics cut total job gains for the year from 584,000 to just 181,000, making 2025 the weakest year for hiring since 2020.

Revised monthly averages dropped from about 49,000 jobs to roughly 15,000.

The revisions reduced payroll estimates by 898,000 jobs between April 2024 and March 2025, the second-largest negative revision on record behind only 2009.

Why the revisions were so large

Each year, the Bureau of Labor Statistics checks its monthly survey estimates against more complete data from state unemployment insurance tax records. Several problems drove the overcount.

Declining survey response rates skewed the original numbers. Models that estimate new and closed businesses did not accurately capture job losses.

Misreporting issues, including how contract and informal workers were counted, also played a role. Every single month of 2025 saw its numbers revised downward.

Long-term unemployed on the rise

The number of people jobless for 27 weeks or more held at about 1.8 million in January, up 386,000 from a year earlier. Long-term unemployed people now make up 25 percent of all unemployed Americans.

The number of people working part-time because they could not find full-time work fell by 453,000 to 4.9 million, but remains up 410,000 over the past year.

Economists describe the market as “low-hire, low-fire,” meaning most workers keep their jobs, but job seekers face long searches.

Fed expected to hold rates steady

The Federal Reserve held its benchmark interest rate at 3.50 percent to 3.75 percent at its January meeting after three rate cuts in late 2025.

After this jobs report, markets put a 94 percent chance on the Fed holding rates steady in March. Traders pushed expectations for the next cut out to around June or July.

Fed Chair Jerome Powell has said the central bank can afford to wait and let the data guide its decisions. The next policy meeting runs March 17-18.

Big layoff announcements add uncertainty

Despite the strong January numbers, major companies have announced large job cuts in recent weeks. UPS said it plans to cut as many as 30,000 employees in 2026.

Amazon announced plans to cut about 16,000 workers.

The outplacement firm Challenger, Gray, and Christmas reported that January layoffs ran 118 percent higher than January 2025. Economists say one strong month does not erase broader softness in the labor market.

The coming months will show whether January was a turning point or an outlier.

This article was created with AI assistance and human editing.

Read more from this brand:

• America’s Job Market Looks Fine on Paper. Getting Hired Is Another Story.
• USA’s Stuck in a Job Market That Won’t Hire and Won’t Fire
• 11 College Degrees That Leave U.S. Graduates Broke and Jobless