US job growth moderated in January while annual revisions from the government also revealed less vigor in the labor market last year than previously thought.
Nonfarm payrolls increased by 143,000 last month after upward revisions to the prior two months, a Bureau of Labor Statistics report showed Friday. Other revisions that the government only carries out once a year now show job growth averaged 166,000 a month last year, a slowdown from the initially reported 186,000 pace.
The change in January employment and updated payrolls figures back to early 2023 show a moderating yet healthy labor market that continues to fuel the economy without contributing to inflationary pressures. It also helps explain why Federal Reserve policymakers have signaled they aren’t in a hurry to lower borrowing costs further after three interest-rate cuts last year.
Job growth in January was largely fueled by health care, retail trade and government. Employment fell in mining, quarrying and oil and gas extraction, as well as temporary help services and auto manufacturing.
The BLS said the wildfires in Los Angeles, as well as severe winter weather in other parts of the country, had “no discernible effect” on employment in the month. Even so, nearly 600,000 people didn’t work in January because of bad weather — the most in four years. Another 1.2 million people who usually work full-time could only find part-time work due to the weather.
That also had an effect on hours worked, which dropped to the lowest since the onset of the pandemic. Meantime, hourly wages climbed 0.5% from December and 4.1% from a year ago.
The jobs report is comprised of two surveys, one of businesses — which produces the payrolls figures — and another of households, which is the source of the unemployment rate.
Friday’s release included an annual update to the employer survey, which showed job growth was 589,000 lower in the 12 months through the March 2024 than initially reported. That compared to the BLS’s preliminary estimate of a markdown of 818,000, which would have been the most since 2009.
The BLS uses records from the unemployment insurance tax system, and also adjusts for the openings and closings of businesses, to revise its previously published payrolls counts.
The household survey reflected new population estimates from the Census Bureau, which drove up the number of employed people in the labor force. A sizable portion of that reflected foreign-born workers, suggesting immigration continued to be a key driver of job growth.
The participation rate — the share of the population that is working or looking for work — was 62.6% in January, which also incorporated the updated population estimates. The rate for workers ages 25-54, was 83.5%.
What Bloomberg Economics Says...
“It’s notable that January’s payroll print is so tepid — and despite the revisions to past data, we think both the establishment and household survey are now overstating the level of employment. We maintain our baseline that the Fed will cut rates by 75 bps this year.”
— Anna Wong, Stuart Paul, Eliza Winger and Chris G. Collins.
It remains to be seen how directives from the Trump administration will impact the labor market. Tens of thousands of government workers have accepted the president’s deferred resignation offer, and the White House is taking further steps to shrink the federal workforce. And any efforts to restrict immigration — or send migrants back home — will constrain a key driver of job growth in recent years.
Separately, Trump’s nominee to lead the Department of Labor, which oversees the BLS, will appear before a Senate committee next week. Lori Chavez-DeRemer, a Republican representative from Oregon, must be cleared by the panel before the full Senate can take up her nomination.
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