The U.S. economy added a smaller-than-expected tally of new jobs last month, data indicated Friday, but a sharp jump in wage growth and revisions tied to population changes and immigration make for a noisy report that might not indicate broader strength in the labor market.
The Bureau of Labor Statistics said 143,000 new jobs were created last month, missing Wall Street's 169,000 forecast and coming in notably lower than the upwardly revised December reading of 307,000.
Other revisions tied to the BLS's new methodology lifted readings for November by 49,000 to 261,000, adding around 100,000 new jobs to the final two-month tallies.
Average hourly earnings, however, spiked in January, rising 0.5% from the previous month for the biggest gain since March 2022, and were up 4.1% on an annual basis. Both figures came in well ahead of Wall Street forecasts.
The headline unemployment rate slipped to 4%, however, while the labor force participation rate rose 0.1 percentage point to 62.6%.
“The first jobs report of 2025 has come in under expectations," said Steve Rick, chief economist at TruStage. "However, the unemployment rate remains stable, hovering around 4.1%.
"We don’t expect this number to change drastically in the coming months, as the Fed has moved to hold interest rate cuts to minimally impact the labor market," he added. "Despite last week’s pause, we continue to project an additional one to two rate cuts in the second half of the year to ensure the economy is stable.”
U.S. stocks were little changed following the data release, with futures tied to the S&P 500 indicating a 2 point opening bell gain and the Nasdaq called 6 points higher. The Dow was last called 12 points higher.
Benchmark 10-year Treasury note yields rose 4 basis points to 4.485% following the data release while rate-sensitive 2-year notes jumped 3 basis points to 4.254%.
The U.S. dollar index, which tracks the greenback against a basket of six global currencies, was marked 0.14% higher at 107.837.
"Today’s employment report probably keeps the Fed on hold for probably one more meeting," said Bryce Doty, senior portfolio manager at Sit Investment Associates.
"While jobs weren’t exceptional by any means, a lower unemployment rate and a strong increase in wage growth means the labor market is still healthy," he added. "Expect yields to drift higher as investors digest the details (but) we doubt this report is strong enough to push yields back up to the recent high."
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The CME Group's FedWatch, meanwhile, now pegs the odds of a quarter-point Fed rate cut in June at just 44.8%, down from around 46% prior to the jobs report release. Traders peg little chance of a reduction in either March or May.
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Earlier this week payroll-processing group ADP reported stronger-than-expected private-sector hiring, as well as solid wage growth for job stayers and job changers, in its January Employment report.
Challenger Gray's closely watched report on corporate layoffs, meanwhile, indicated the lowest number of January job cuts in three years.
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