130,000 jobs were added in January while employment reviews cut hundreds of thousands last year
WASHINGTON (AP) — U.S. employers added a surprisingly strong 130,000 jobs last month, but government revisions cut American payrolls for 2024-2025 by hundreds of thousands.
The Labor Department said on Wednesday that the unemployment rate had fallen to 4.3%.
The report included major revisions that reduced the number of jobs created last year to just 181,000, the weakest since the pandemic year of 2020, and less than half the previously reported 584,000.
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The labor market has been slowing for months, although the economy is recording strong growth.
But January’s numbers were stronger than the 75,000 economists expected. Health care accounted for nearly 82,000 jobs, or more than 60%, of new jobs last month. Factories added 5,000 workers, ending a streak of job losses that had lasted 13 straight months. The federal government cut 34,000 jobs.
Average hourly earnings rose 0.4% from December to January.
The unemployment rate fell from 4.4% in December as the number of Americans working rose and the number of unemployed fell.
Weak hiring over the past year reflects the continuing impact of high interest rates, billionaire Elon Musk’s purge of the federal workforce last year, and uncertainty caused by President Donald Trump’s erratic trade policies, which have left companies uncertain about hiring.
The dismal numbers came ahead of Wednesday’s report. Employers reported just 6.5 million jobs in December, the lowest number in more than five years.
Payroll processor ADP reported last week that private sector employers added 22,000 jobs in January, far fewer than economists had expected. Outplacement firm Challenger, Gray & Christmas said companies cut more than 108,000 jobs last month, the most since October and the worst January for job cuts since 2009.
Several well-known companies announced layoffs last month. UPS cuts 30,000 jobs Chemical giant Dow, which is shifting to more automation and artificial intelligence, is cutting 4,500 jobs. Amazon is cutting 16,000 jobs in the company, the second round of mass layoffs in three months.
A stagnant labor market is disproportionate to the performance of the economy.
From July to September, America’s gross domestic product – the production of goods and services – advanced at an annual rate of 4.4%, the fastest in two years. Consumer spending was strong, and growth was boosted by rising exports and declining imports. This came in addition to strong growth of 3.8% in the period from April to June.
Economists wonder whether job creation will eventually accelerate to catch up with strong growth, perhaps as President Donald Trump’s tax cuts translate into large tax refunds that consumers start spending this year. But there are other possibilities. GDP growth may slow and fall in line with a weak labor market or advances in artificial intelligence and automation may mean that the economy could move forward without creating many jobs.
Wednesday’s report included the government’s annual benchmark revisions, which are intended to take into account the more accurate job numbers that employers report to state unemployment agencies. They cut 898,000 jobs from payroll in the year ending March 2025.
Despite recent high-profile layoffs, the unemployment rate has looked better than the employment numbers.
That’s partly because President Donald Trump’s campaign against immigration has reduced the number of foreign-born people competing for work.
As a result, the number of new jobs the economy needs to create to prevent the unemployment rate from rising – the break-even point – has declined. In 2023, when migrants were flocking to the United States, the number reached 250,000, according to economist Anton Cheremukhin of the Federal Reserve Bank of Dallas. By mid-2025, Cheremukhin found that number had fallen to 30,000. Researchers at the Brookings Institution believe the number may now reach 20,000 and trend down.
The combination of weak employment and low unemployment rates means that most American workers enjoy job security. But those looking for jobs — especially young people who could compete at the entry level with artificial intelligence and automation — often struggle to get a job.
