U.S. Adds 143,000 Jobs in January, Unemployment Rate Drops to 4.0%

January Job Growth Falls Short of Expectations Amid Economic Shifts

The U.S. Department of Labor announced on February 7 that non-farm payroll employment, including government agencies, increased by 143,000 jobs in January. This figure falls short of market expectations, which had projected job growth between 170,000 and 180,000. Despite missing forecasts, January’s job gains align closely with the 2024 monthly average of 166,000 new jobs.

Non-farm payroll employees, commonly referred to as wage and salary workers, account for approximately 97% of all employed individuals in the United States. This statistic highlights the significance of payroll employment as a critical indicator of the country’s labor market health.

In a separate household survey, the U.S. unemployment rate declined to 4.0% in January, down from 4.1% in December. This drop reflects a reduction in the number of unemployed individuals, which fell to 6.849 million from the previous month’s 6.886 million. The total labor force participation stood at 170.74 million, with 163.89 million people employed. Among them, 159.06 million were payroll employees, representing 97.0% of the employed population.

The Department of Labor also revised job growth figures for November and December 2024, increasing them by 51,000 and 49,000 jobs, respectively. These adjustments brought total job gains for those months to 256,000 and 307,000. However, the average monthly job growth for 2024 remained at 166,000, impacted by lower-than-usual gains in August (78,000) and October (43,000) due to the effects of hurricanes.

Economists emphasize that the U.S., with a population of 335 million and over 170 million active labor force participants, needs to add at least 100,000 jobs monthly to sustain healthy economic growth. January’s figures, while modest, indicate steady progress in the face of economic fluctuations.

The Federal Reserve, which had paused interest rate hikes after three consecutive cuts, maintained its target rate range at 4.25%–4.50% during its policy meeting on January 29. However, January’s weaker-than-expected job growth could complicate the Fed’s stance on holding rates steady in upcoming meetings. Former President Donald Trump has been vocal in urging the Fed to implement aggressive interest rate cuts, adding political pressure to the economic debate.

As the labor market continues to adjust to shifting economic conditions, policymakers and economists will closely monitor employment trends, inflation rates, and monetary policy decisions to gauge the overall health of the U.S. economy.