The U.S. economy added 143,000 jobs and the unemployment rate fell to 4 percent in January, according to data released Friday by the Labor Department.
The January jobs report, which covered the final month of former President Biden’s term, was largely in line with expectations. Economists expected the U.S. to have added roughly 170,000 jobs and maintain a jobless rate of 4.1 percent, according to consensus estimates.
Payrolls were revised up for the previous two months, increasing by 49,000 to 261,000 jobs added in November and by 51,000 to 307,000 jobs added in December.
Across those two months, employment levels are 100,000 jobs higher than previously reported, indicating underlying strength in the job market.
Economists saw the January jobs report as reassuring, despite falling short of top-line expectations.
“At a time of high uncertainty and volatility, the job market is providing some reassurance, at least for now,” Bankrate economist Mark Hamrick wrote in a commentary. “The nation’s unemployment rate dropped to 4 percent in January, the lowest since last May. It is not too hot and not too cold.”
Labor force participation ticked up in January to 62.6 percent from 62.5 percent, and the size of the labor force increased to 171 million workers from 169 million in December.
The downtick in the unemployment rate and increased size of the labor force likely reflects surging immigration to the U.S. in recent months, several economists noted.
“The household survey was adjusted in January to recognize the impact of substantial international immigration in recent years, adding 2.9 million people to the population count as of January, which is one factor pushing the unemployment rate down,” Mortgage Bankers Association economist Mike Fratantoni wrote in an analysis.
Fitch economist Brian Coulton said the net immigration boost was a “key factor” in amping the U.S. labor supply in the last couple of years.
Hourly wages for all employees excluding farmworkers rose by 17 cents, or half a percent, to $35.87, representing the fastest monthly increase in a year. Hourly earnings have increased by 4.1 percent over the past year.
“The jump in hourly average earnings is … newsworthy,” Coulton noted.
The health care sector added 44,000 jobs in January, retail added 34,000 jobs, and social assistance added 22,000 jobs. The mining and logging sector lost 7,000 jobs, motor vehicles lost 9,700 jobs, and the temp work sector shed more than 12,0000 jobs following the holidays.
The strength in January employment conditions likely puts another interest rate cut from the Federal Reserve on ice. The U.S. central bank cut rates through the fall before pressing the pause button in January following strong employment and price data.
“Today’s jobs report has likely taken a March rate cut off the table,” said Seema Shah, chief strategist at Principal Asset Management. “The broader picture is still one of labor market resilience and sustained wage pressures. This simply gives the Fed little reason to cut policy rates immediately.”
Updated at 9:31 a.m. EST
