January jobs report indicates labor market's uncanny balance
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Illustration: Annelise Capossela/Axios
The U.S. labor market started 2025 — and President Trump's term — in a state of uncanny balance.
Why it matters: Unemployment is low and steady, and job growth is chugging consistently forward. It's an environment that allows policymakers at the Federal Reserve and beyond to be patient in deciding what to do next.
- There is plenty ahead that might jolt the economy for better or worse — trade wars, AI, fiscal policy and more. But January was a month of labor market equanimity.
What they're saying: "Employers' ability to maintain a 'business as usual' attitude in the face of political noise, rapid policy adjustments and ongoing geopolitical uncertainty has so far helped the overall labor market — and economy — maintain an even keel over the past few months," Indeed economist Cory Stahle wrote in a note.
- "But past returns are no guarantee of future results, especially in this fast-moving, often volatile age," Stahle added.
By the numbers: The economy added 143,000 jobs in January, a healthy pace — though it does reflect a moderation in jobs growth from the final months of 2024.
- The economy added a combined 100,000 more jobs in November and December than initially estimated, likely a continuation of the jobs rebound after hurricanes weighed on hiring.
Between the lines: With the January report came the Bureau of Labor Statistics' annual revisions, which showed a softer labor market than was previously known.
- There were more than half a million (589,000) fewer jobs added in 2024 than initially reported.
- That means the labor market added 166,000 payrolls on average each month last year, not the 186,000 monthly average first estimated.
The government also updated population estimates to better reflect immigration rates and an improved methodology. That update increased the size of the labor force by more than 2 million workers.
- The unemployment rate ticked down to 4% last month, a historically low level. But if you strip out the population adjustment, the jobless rate fell a bit more, by 0.2 percentage point.
The intrigue: Perhaps the only sure sign of any lingering heat in the labor market was last month's pop in wage growth.
- Average hourly earnings for private-sector workers rose 0.5% in January, with a gain of 4.1% over the past 12 months — well outpacing expected inflation. (January's Consumer Price Index is out Wednesday.)
Zoom out: The surveys behind the jobs data capture the week just before the presidential inauguration. Therefore, the January report is the best snapshot yet of the labor market that Trump inherited.
- It was the lowest unemployment rate at the start of a new presidential term since Richard Nixon arrived at the White House in January 1969.
The data indicated a somewhat tighter job market than seemed the case a few months ago, suggesting the Fed will keep interest rates steady until something changes.
Zoom in: The lower unemployment rate, strong revisions to November and December job creation, and high growth in hourly pay all point to a labor market that doesn't need any help from lower interest rates.
- As a result, the policy-sensitive two-year Treasury yield was up 0.08 percentage points late Friday morning, to 4.51%, on the assumption that less rate-cutting is on the way.
- CME's FedWatch tool, based on futures prices, now points to a 53% chance of at least one rate cut by June, down from 65% on Thursday.
Flashback: It's a sharp contrast with late summer, when a wave of data pointed toward a deterioration in the labor market and the Fed reacted with a supersized half-point interest rate cut.
The bottom line: "The good news is ... the economy is in a good place," Minneapolis Fed president Neel Kashkari said on CNBC's Squawk Box on Friday morning.
- "So, we're in a very good place to just sit here until we get a lot more information on the tariff front, on the immigration front, on the tax front, etc. All of those are going to be important."

