U.S. Payrolls Rose More Than Expected in January

U.S. employers reported adding 130,000 jobs in January 2026, more than was expected, and the unemployment rate dipped to 4.3%, according to the latest employment report released by the U.S. Bureau of Labor Statistics (BLS) Feb. 11.

The strongest monthly jobs tally (at least before upcoming revisions are made) since December 2024 marks a turnaround after hiring slowed sharply in 2025. Employment growth averaged just 15,000 monthly new jobs last year, a significant cooling from prior years. The moderation in job growth has been attributed to many things, but chief among them is the Trump administration’s trade and immigration policies, which economists and policymakers said reduced both demand for and supply of workers. The latest data likely solidifies the Federal Reserve staying on hold with interest rates.

In addition to the January numbers, the BLS released final benchmark revisions for the period of April 2024 to March 2025. Initial employment counts were lowered by a total of 898,000. The net result: the U.S. produced only 1.2 million jobs in 2024, versus the previously estimated 2 million. The labor market slowed to a crawl last year, producing only 181,000 jobs versus the previously estimated 584,000.

“The labor market got off to a solid start in January,” said Laura Ullrich, director of economic research at the Indeed Hiring Lab. “That unexpected strength is particularly welcome given benchmark revisions to full-year 2025 data revealed that a labor market already viewed as soft actually performed worse than initially thought. There are now real doubts about how long the broader economy can continue to power forward with the job market at an almost complete standstill outside of the essential health care sector.”

Daniel Zhao, chief economist at Glassdoor, characterized the January jobs report as “a tale of two time periods,” revealing with the benefit of hindsight, a much slower 2025 than originally reported, but at the same time, showing a much stronger January than expected.

“The acceleration in job gains in January starts the year with a tinge of optimism,” he said.

The January labor market data presents a nuanced picture of an economy potentially finding its footing after a sluggish year, agreed Nicole Bachaud, labor economist at ZipRecruiter. “With the unemployment rate ticking down and a slight rise in December hires, the significant slowdown of 2025 may be showing early signs of giving way to a renewed warming of hiring activity,” she said.

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Amy Glaser, senior vice president at Adecco, said that “January’s job gains exceeded expectations despite challenging weather conditions that impacted the East Coast, signaling ongoing strength in the labor market.” She added that the report “aligns with what we’re seeing on the ground, including sustained demand for talent in sectors like health care, and growing momentum in hospitality, particularly across the events space. Coupled with the increased investments employers are making in talent retention, this points to a strong start to 2026.”

Ger Doyle, regional president, North America at ManpowerGroup, said that the latest jobs numbers point to a labor market that continues to show more underlying strength than many anticipated.

“We ended 2025 with roughly one million fewer job openings than the year before, the lowest level since late 2020, and employers were clearly being more selective,” Doyle said. “Our data shows January had a 5% increase in new postings, which is a small but meaningful indication that organizations are beginning the year with clearer hiring plans. After several months of declines in late 2025, seeing momentum return across many functions is a positive sign.”

There have been other signs of recent labor market deterioration. Job openings plunged in December to their lowest level since September 2020, according to the BLS, and announced layoffs were the highest in January since the global financial crisis in 2009.

“The American economy in early 2026 is probably confusing to most Americans,” Ullrich said. “The labor market looks increasingly weak, but stock markets are hitting all-time highs. The low-hire, low-fire environment continues for now, and the declining unemployment rate is always a welcome sign. But this balance is precarious.”

Heading into 2026, economists forecast a labor market that is not dramatically different than what was experienced in 2025. Indicators point to continuity rather than disruption, with job openings, hiring, and unemployment hovering near current levels. The most likely scenario is a prolonged low-hire, low-fire environment marked by caution, uneven demand across industries, and persistent policy uncertainty.

“Much like last year, employers still have fewer incentives to make long-term investments in headcount, with elevated labor costs, a shrinking workforce, and uncertainties about the overall business environment,” said Noah Yosif, chief economist and head of research at the American Staffing Association. “Tailwinds including interest rate cuts, changes to the tax code, as well as stabilization in trade-related tensions are on the way but will take time to permeate the economy and bolster confidence among employers and job seekers alike.”

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Industry Breakdown

Health care remains the primary engine of the labor market, adding 82,000 positions in January. Construction employment rose by 33,000 jobs and professional and business services rose by 34,000 jobs. “Construction and manufacturing continue to show resilience, remaining viable paths for job seekers,” Bachaud said. “Modest gains in the retail and hospitality sectors provided a specific boost to entry-level and younger workers.”

Several industry categories posted job losses, including federal government jobs (-34,000) and financial roles (-22,000). Since reaching a peak in October 2024, federal government employment is down by 327,000, or 11 percent.

“The report aligns with more real-time indicators from Indeed data, which shows job postings have increased slightly over the past few months after steady declines for most of 2025,” Ullrich said. “Postings remain especially high in the health care, social assistance, and engineering sectors.”

Raj Namboothiry, head of Manpower US, said that manufacturing hiring continues to evolve in ways that reflect both the challenges of the past year and the investments shaping the future. “While our data show that last year brought 60,000 fewer jobs across several traditional production roles, January offers indications that employers are preparing for a period of renewed activity,” he said. “New postings for manufacturing-related roles in January increased more than 20% compared to December, with stronger demand for machine operators, maintenance technicians, quality inspectors, CNC and tooling specialists, and roles tied to packaging, line operations, and plant reliability. These areas highlight a broad need for workers who can manage technical equipment and support more modern production environments.”

Unemployment Improves

In addition to the dip in the unemployment rate, a more encompassing measure that includes discouraged workers and those holding part-time positions for economic reasons also edged down to 8%, down 0.4 percentage point from December.

“Unemployment remains at a healthy level and is not showing signs of deterioration,” Zhao said. “The government shutdown may have contributed to the rise in the unemployment rate in the fall. It has since retreated, falling in December and further in January,” he said.

Wages Show Steady Growth

In January, average hourly earnings for private-sector payrolls rose by 15 cents to $37.17, representing 0.4% growth for the month and 3.7% annually, in line with forecasts.

“While wage growth is gently cooling from its peak, it remains elevated and is currently outpacing inflation, indicating that workers still retain a degree of bargaining power in the current environment,” Bachaud said.