The US added 130,000 jobs last month, the department of labor said, significantly higher than the 55,000 predicted in surveys by Dow Jones Newswires and The Wall Street Journal.
The jobless rate inched lower to 4.3% from 4.4% in December.
But revisions to 2025 figures also indicated that the world’s biggest economy added significantly fewer jobs than earlier estimated for all of last year, averaging 15,000 per month rather than 49,000.
Moody’s Analytics chief economist Mark Zandi warned this week that Trump’s economic policies have driven a “dramatic slowdown in job growth” overall.
A part of this is due to highly restrictive immigration policy – hitting labour supply – while labour demand has also been impacted as tariffs and government job cuts take a toll on industries.
White House officials have tried to get ahead of Wednesday’s report and manage expectations about job creation, citing rising productivity from artificial intelligence advancements.
White House National Economic Council director Kevin Hassett told CNBC at the start of the week that “you should expect slightly smaller job numbers that are consistent with high GDP growth right now.”
“One shouldn’t panic if you see a sequence of numbers that are lower than you’re used to,” he added, pointing to cooling population growth but “skyrocketing” productivity growth.
This has not stopped Democratic Senator Elizabeth Warren from taking aim at the Trump administration, saying that the president’s economic agenda “absolutely hammered the labour market in 2025.”
Steady Fed rates
For now, government data suggest the labour market is showing more underlying resilience than anticipated.
This provides support for Federal Reserve officials who have voted to keep interest rates unchanged for the time being, said Mortgage Bankers Association chief economist Mike Fratantoni.
But he flagged that “job gains continue to be focused in just a few sectors, matching the uneven pace of economic growth we are seeing in many data releases.”
Industries such as health care, social assistance and construction saw job gains in January, while losses took place in sectors like the federal government and financial activities.
“The surprisingly strong job gains in January were driven mainly by health care and social assistance,” said Navy Federal Credit Union chief economist Heather Long.
But she added that this is “enough to stabilise the job market and send the unemployment rate slightly lower.”
“This is still a largely frozen job market, but it is stabilising,” she said. “That’s an encouraging sign to start the year.”