US Added Fewer Jobs Than Expected, Unemployment Rate Dips to 4 Percent

A hiring sign at the Fashion Centre at Pentagon City shopping mall in Arlington, Va., on Jan 3, 2024. Madalina Vasiliu/The Epoch Times

The U.S. economy added fewer new jobs than expected in January, offset by a lower unemployment rate and stronger wage growth.

According to the Bureau of Labor Statistics, the country created 143,000 jobs, down from an upwardly revised 307,000 in December 2024.

The consensus forecast indicated a reading of 170,000 payroll additions.

The unemployment rate dipped to 4 percent from 4.1 percent, below economists’ expectations of 4.1 percent.

Workers experienced more substantial wage growth to kick off 2025. Average hourly earnings rose by 0.5 percent monthly, up from 0.3 percent. Year over year, hourly earnings growth rose to 4.1 percent from 3.9 percent.

The labor force participation rate increased to 62.6 percent while average weekly hours dipped to 34.1.

Much of the job creation was concentrated in health care (44,000), retail (34,000), government (32,000), and social assistance (22,000). Manufacturing was little changed with just 3,000 new positions added.

The last two months of employment numbers were revised higher. The November 2024  jobs report was adjusted higher by 49,000 to 261,000, and the December 2024 figures were also revised higher by 51,000 to 307,000.

In addition to the December job numbers, the Bureau of Labor Statistics released revisions for employment levels in 2024. The data confirmed that all months were adjusted downward, with the average revision above 600,000.

Officials noted that the wildfires in Southern California and severe winter weather that occurred in much of the United States had little effect on the January jobs report or response rates.

A deeper dive into the jobs data highlighted that full-time jobs increased by more than 2.3 million and part-time jobs fell by 17,000. Additionally, the number of people working two or more jobs surged by close to 300,000 to 8.764 million.

The level of employed foreign-born individuals swelled by nearly 2 million from January 2024 to January 2025. By comparison, the number of employed U.S.-born workers jumped by 766,000.

“Today’s jobs report reveals the Biden economy was far worse than anyone thought, and underscores the necessity of President [Donald] Trump’s pro-growth policies,” the White House said in a statement.

Market Reaction

U.S. stocks were slightly down before the opening bell.

Treasury yields were green across the board, with the benchmark 10-year yield topping 4.46 percent.

The U.S. dollar index, a gauge of the buck compared to a weighted basket of rival currencies, rose by as much as 0.2 percent.

The January jobs report likely signals that the Federal Reserve will keep its current rate-cutting cycle paused at the next meeting, says Bryce Doty, senior portfolio manager and senior vice president at Sit Investment Associates.

“While jobs weren’t exceptional by any means, a lower unemployment rate and a strong increase in wage growth means the labor market is still healthy,” Doty said in a note emailed to The Epoch Times.

“Expect yields to drift higher as investors digest the details,” he added. “However, we doubt this report is strong enough to push yields back up to the recent high.”

While job growth could be slowing, January is usually a “noisy month” as the surge in holiday hiring slows, according to Chris Zaccarelli, chief information officer for Northlight Asset Management.

“While we remain cautiously optimistic in early 2025, we see much more downside potential this year than we have in the prior two years and believe now is a time for caution and a dialing back of risk-taking,” Zaccarelli said in a note emailed to The Epoch Times.

Assessing the Situation

Federal Reserve Chair Jerome Powell told reporters at last month’s post-meeting press conference that the U.S. labor market was “stable” and “broadly in balance.”

“The labor market is at a sustainable level. It’s not overheated anymore. We don’t think we need it to cool off anymore. We do watch it extremely carefully,” Powell said.

This week’s flurry of labor market data presented a mixed picture of employment conditions.

The December 2024 Job Openings and Labor Turnover (JOLTS) report revealed the number of employment vacancies plummeting to 7.6 million, down from 8.156 million in November 2024.

Job quits edged up to 3.197 million, suggesting that more workers were confident in their ability to resign from their positions and find other jobs.

Private-sector employment was robust last month. According to the ADP National Employment Report, private businesses added 183,000 new jobs, slightly higher than the 176,000 in December. This also came in above the consensus forecast of 150,000.

“We had a strong start to 2025 but it masked a dichotomy in the labor market,” said Nela Richardson, chief economist at ADP.

Consumer-facing sectors drove much of last month’s hiring, Richardson noted.

“Job growth was weaker in business services and production,” she said.

Wage growth continued to ease, with the median change in annual pay for job-stayers and job-changers coming in at 4.7 percent and 6.8 percent, respectively.

Finally, the number of Americans filing for unemployment benefits rose at a higher-than-expected pace last week.

According to the Department of Labor, initial jobless claims increased by 11,000 to 219,000 for the week ending Feb. 1.

Continuing jobless claims—a measure of the number of individuals who have already filed and are currently receiving unemployment benefits—climbed to 1.886 million, up from 1.85 million in the previous week.

The jobless claims four-week average, which removes week-to-week volatility, jumped by 4,000 to 216,750.