A total of 143,000 jobs were added in January, indicating that the labor market was starting to slow down in the early months of 2025.
The numbers
Economists initially predicted a stronger hiring rate, anticipating the economy had created 170,000 new jobs last month, but actual numbers fell short of those expectations.
On Friday, the Bureau of Labor Statistics reported that the US unemployment rate decreased slightly to 4% last week, down from 4.1% the previous month.
FactSet had predicted that the unemployment rate would stay at 4.1% in January.
What it means
The January employment numbers indicate a slower pace of hiring compared to December, which saw 307,000 new jobs added on the job market. Despite this, the 143,000 new jobs created in January remain close to the monthly average of 166,000 for the year 2024, as reported by the Bureau of Labor Statistics.
According to a recent report by the BLS, healthcare, retail, and social assistance businesses had increased their new hires last month. However, employment opportunities decreased in the mining, quarrying, and oil and gas extraction sectors.
Although recent data still shows a solid labor market, though at a slower rate, it suggests interest rates for consumers and businesses will likely remain elevated for an extended period. The Federal Reserve wants to achieve a more significant reduction in inflation before making further interest rate adjustments, with a target annual inflation rate of 2%.
Initial economic stimulus attempts to reverse a sequence of interest rate decreases made last fall were put on hold.
At that meeting, Federal Reserve Chairman Jerome Powell stated that the Fed wasn’t in a hurry to lower interest rates again, since the US economy was “in a very strong position,” citing steady growth in GDP and substantial job gains.
What the experts say
According to Sandra Moran, a workforce expert and ADP’s WorkForce Software spokesperson, it appears as though the strong job numbers seen in December may be an aberration.
“There’s a growing trend of businesses hesitating to hire more employees, which is resulting in fewer job opportunities for people who are looking for work,” Moran stated.
The latest employment numbers released by the Bureau of Labor Statistics on Friday showed that the wildfires in Los Angeles and sudden drop in temperatures in January had no noticeable impact on the national job market.
It’s undeniable that job growth seems to be slowing down, but January tends to be a pretty volatile month. You see, December is a time when a lot of companies scramble to fill holiday positions, which means January usually follows with a bit of a lull in hiring, resulting in less net hires overall.
