Lucia Mutikani
WASHINGTON, Feb 11 (Reuters) – U.S. job growth accelerated in January and the unemployment rate fell to 4.3%, signs of stabilizing labor markets that could give the Federal Reserve room to keep interest rates on hold for some time while policymakers monitor inflation.
The U.S. Department of Labor’s Bureau of Labor Statistics said Wednesday that nonfarm payrolls increased by 130,000 jobs last month, following a 48,000-job decline in December. Economists polled by Reuters expected employment to increase by 70,000 jobs. It is expected that 10,000 jobs will be lost and 135,000 jobs will be added.
The unemployment rate fell from 4.4% in December.
Part of the reason for the better-than-expected job growth is that seasonally sensitive industries such as retailers and delivery companies hired fewer holiday workers last year than usual. January is typically the month with the largest number of holiday-related layoffs. Given lower seasonal hiring, there will likely be fewer layoffs, boosting wage growth.
They said trade policy continued to cast a shadow over the labor market and responded to President Donald Trump’s threat last month to impose additional tariffs on European allies for rejecting U.S. demands to buy Greenland. Trump later backed down suddenly. The jobs report was originally scheduled for Friday but was delayed due to the three-day federal government shutdown.
Beginning with the January report, the BLS updates the birth and death models each month by incorporating current sample information. The model, which the Bureau of Labor Statistics uses to try to estimate how many jobs are added or lost as companies open or close in a given month, has been accused of overcounting employment.
Economists estimate that the update to the births and deaths model, which follows the same methodology applied to the April-October 2024 estimates after annual benchmark employment revisions, could lead to as many as 50,000 fewer jobs being added to job growth than in recent months.
Although payrolls rose in January, the labor market remains sluggish and remains struggling despite strong economic growth. Concerns about jobs and high inflation have eroded Americans’ approval of Trump’s handling of the economy.
Economists say the Trump administration’s trade and immigration policies have cooled the labor market, although they expect tax cuts to boost hiring this year.
The U.S. central bank last month kept its benchmark overnight interest rate in a range of 3.50%-3.75%.
White House economic adviser Kevin Hassett warned on Monday that job growth will slow in the coming months as labor force growth slows. The Census Bureau said last week that the U.S. population increased by just 1.8 million people, or 0.5%, in the year to June 2025, to 341.8 million.
