January 2025 jobs report: 143,000 new jobs added, falling short of expectations
- The January jobs report came in softer than expected, with 143,000 jobs added compared to the anticipated 175,000. However, upward revisions totaling 100,000 jobs for the prior two months affirm the U.S. labor market remains stable.
- The household survey showed a slight decrease in the unemployment rate from 4.1% to 4%. Meanwhile, consumers continue to experience real wage growth, with average hourly earnings increasing by 4.1% year-over-year.
- The concentration of job growth is worth watching. The health care and government sectors added 93,000 jobs in January, while more cyclical sectors like construction and manufacturing remains subdued, with only 7,000 jobs added in January and 73,000 over the past year.
The U.S. economy added 143,000 nonfarm payroll jobs in January, while the unemployment rate edged down to 4%, according to the Bureau of Labor Statistics (BLS). This modest job growth fell short of consensus expectations, which had anticipated an increase of around 175,000 jobs. However, upward revisions totaling 100,000 jobs for the prior two months affirm the U.S. labor market remains stable.
Job gains were concentrated in the health care, retail trade and social assistance sectors. Government employment also continued its upward trend during the month. The areas of the economy that saw job losses include the mining, quarrying and oil and gas extraction industries.
The number of long-term unemployed individuals remained steady as well, indicating a labor market landscape that has reached some equilibrium over the last several months.
Wage growth came in stronger than expected at 0.5% month-over-month (versus expectations of 0.3%), but the year-over-year growth of 4.1% still points to a balanced, rather than overheating, economy.
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As a part of this month’s report, the BLS released its annual revisions to past employment data. The seasonally-adjusted total nonfarm employment level for March 2024 was revised downward by 589,000. The total civilian labor force increased by 2.1 million which primarily accounted for the significant rise in immigration. According to the BLS, “the adjustment increased the total unemployment rate, employment-population ratio and labor force participation rate by 0.1 percentage point each.”
How did the markets react to January’s jobs data?
Market reactions to the January jobs report were muted. U.S. equity markets showed little change after the report's release, as investors assessed the mixed signals from the labor market data.
What’s next for the Federal Reserve?
The latest report confirms that the labor market remains healthy and supports the Federal Reserve’s “wait and see” approach. We will be watching Wednesday’s Consumer Price Index (CPI) release, a key inflation measure, to better gauge the progress on bringing inflation closer to the Fed’s 2% target.
We also still expect the Federal Reserve to cut interests rates three times over the year, although the timing is likely to be delayed given the underlying strength of the U.S. economy.
As always, consult with a J.P. Morgan advisor to understand how this data could impact your portfolio.
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