The U.S. economy put in a strong showing at the start of 2026, following a year of disruptions that depressed both the demand for labor and its supply.
Employers added 130,000 jobs in January, the Labor Department reported on Wednesday, in a report delayed from last week by a short government shutdown. The unemployment rate fell to 4.3 percent from 4.4 percent a month earlier.
The peppier-than-expected data is a sign that the labor market might be emerging from a period of extremely slow growth brought on by a trade war that made companies hesitant to hire, an immigration crackdown that lowered the number of available workers, and a federal government firing spree.
Annual revisions to earlier data changed the picture of last year. The economy added only 181,000 jobs in 2025, down from an earlier estimate of 584,000.
Here’s what else to know:
More people working: The labor force participation rate for people in their prime working years, between 25 and 54, jumped to 84.1 percent. That is as high as it’s been since 2001.
Narrow growth: As has been the case for more than a year, health care accounted for more than half of job gains in January, adding 82,000 positions. Construction gained 33,000 jobs, but most other sectors were flat, and the federal government shed another 35,000 positions.
Working longer: In another sign of strong labor demand, the average workweek edged up by 0.1 hours. That number has been depressed for months, as employers tried to keep people busy even with fewer orders.
Wages up: Average hourly earnings rose by 3.7 percent over the year, a pace that has been fairly consistent in recent months. However, that growth has become more stratified, with those on the higher end of the income ladder seeing faster raises.
Slow hiring, slower layoffs: Other federal data released last week showed that job openings dropped to 6.5 million in December, the lowest level since September 2020. At the same time, initial claims for unemployment insurance remained very low in January, suggesting that employers are not laying off more people than usual.
A seasonal quirk: Sluggish hiring of seasonal workers during the holidays may have boosted the number. If fewer were laid off in January, that would translate into a stronger reading after the Bureau of Labor Statistics adjusts for typical seasonal fluctuations.
The Fed has time: The February jobs report is slated to be released before the Federal Reserve meets next to set interest rates, in mid-March. That is, unless another government shutdown delays the report again.
- The Black jobless rate, as noted, fell to 7.2% from 7.5%
- The White jobless rate fell to 3.7% from 3.8%
- The Hispanic/Latino jobless rate fell to 4.7% from 4.9%
- The Asian jobless rate jumped to 4.1% from 3.6%
- Circling back to health care, it’s worth noting that this sector continues to be the standout for hiring and that it accounted for the majority of job growth in 2025. Here’s a breakdown of the 82,000 jobs the sector added:
- Ambulatory health care services +50,000
- Hospitals +18,000
- Nursing and residential care facilities +13,000
- Job growth in health care averaged 33,000 per month in 2025
- Manufacturers added 5,000 roles, a notable bucking of the trend in that sector. But, of course, it’s not yet itself a trend.
- The annual payroll gain for 2025 is now tallied at just 181,000. Strip out Covid and the Great Recession, and that’s the worst year since 2003, when the US job market was still recovering from the dot-com bust and its accompanying recession.
- There are a lot of numbers to wade through, but here’s one worth noting -- revisions to the November and December payrolls data mean there were 17,000 jobs added than previously reported.
- 🚨 Jobs Report Surprise: Payrolls Beat Expectations
U.S. payrolls rose by +130,000 in January, crushing expectations of +55,000.
📉 Unemployment rate: 4.3% (vs. 4.4% expected)
That’s more than double the forecast and a labor market that continues to show resilience despite higher rates and tightening financial conditions.
What this means for markets:
🔹 Stronger labor = Less urgency for the Fed to cut
🔹 Yields could push higher
🔹 Rate-sensitive sectors (homebuilders, small caps & high multiple tech) may feel pressure
🔹 Financials could benefit if the curve steepens
The key question now:
Is this strength sustainable? Or is it lagging data before a slowdown?
Wage growth and labor participation will matter just as much as the headline number.
We’re still in a data-dependent Fed environment, and this report just shifted the narrative.