The US labor market delivered a surprise to the upside in January, adding 130,000 jobs — roughly double economists’ expectations — while the unemployment rate edged down to 4.3%, according to Labor Department data released Wednesday.
Economists surveyed ahead of the report had forecast a gain of around 65,000 jobs, though estimates varied widely, ranging from modest growth to outright job losses. Instead, payroll growth came in near the top end of projections, offering a near-term boost to confidence about the resilience of the labor market.
But beneath the headline strength, substantial downward revisions to last year’s data paint a much weaker picture of overall job creation. Updated figures show the economy added just 181,000 jobs for the entirety of 2025 — sharply revised down from the previously reported 584,000. That marks the slowest pace of annual job growth outside of a recession since 2003.
On average, the economy added only about 15,000 jobs per month last year, underscoring the extent of the slowdown. Revisions also shaved gains from the final months of 2025, with November payroll growth lowered to 41,000 from 56,000 and December reduced slightly to 48,000.
The report was initially scheduled for release last Friday but was delayed by a brief partial government shutdown, heightening anticipation among investors and policymakers. January’s report is often closely watched because it includes annual benchmark revisions that incorporate more complete data from unemployment insurance tax records and other sources. This year’s revisions showed that for the 12 months ending in March 2025, the economy added 898,000 fewer jobs than previously estimated — a significant adjustment, though slightly improved from an earlier estimate of 911,000 fewer jobs.
The January rebound comes after private-sector data suggested a bruising start to the year for job seekers, with limited hiring activity reported in early surveys. The stronger-than-expected payroll figure may ease some immediate concerns, but the broader trend suggests a labor market that has cooled considerably from the rapid hiring pace seen in previous years.
Administration officials have sought to temper expectations around job growth, arguing that slower hiring may reflect structural changes rather than economic weakness. They point to a shrinking labor force, driven in part by stricter immigration policies, as well as productivity gains that allow companies to expand output without significantly increasing headcount.
The unemployment rate’s slight decline to 4.3% indicates continued stability in the job market, with layoffs remaining relatively contained. However, the sharp downward revisions raise questions about how much underlying momentum remains in the economy.
For markets and policymakers, the report presents a mixed signal. January’s job gains suggest that the labor market retains pockets of strength, but the broader revisions confirm that hiring slowed dramatically last year. As the Federal Reserve evaluates the path of interest rates, the balance between cooling job growth and stable unemployment will be a key factor in determining whether the economy can maintain steady expansion without reigniting inflationary pressures.
The January report may have exceeded expectations, but the longer-term trend signals a labor market that is steady — not surging — and increasingly dependent on productivity and structural shifts rather than rapid hiring to drive growth.
