The U.S. created 143,000 jobs in January, which is fewer than what experts predicted. However, the jobless rate dropped slightly to 4% from 4.1%, which was better than expected and is still close to the lowest levels in history.
Experts asked by Dow Jones expected 169,000 new jobs in January, following a strong increase of 307,000 jobs in December, based on updated figures. On Friday, the Bureau of Labor Statistics shared updated numbers, which include normal yearly changes. They increased the salary counts for November and December by a total of 100,000.
The BLS lowered its prediction for monthly job growth in 2024 from 186,000 to 166,000. This change supports the belief that hiring last year may not have been as strong as earlier numbers indicated. From 2023 to early 2024, the U.S. added 589,000 fewer jobs.
At the same time, millions of people’s paychecks continue to grow. Average hourly earnings went up by 4.1% in the past year. This increase is partly due to minimum wage increases that began last month in 21 states and many cities, according to Mark Hamrick, a senior economist at Bankrate. The Economic Policy Institute predicted in December that more than 9.2 million workers would see increases in January totaling $5.7 billion.
“Wage growth is still higher than the recent inflation rate and has even increased a little,” Hamrick said in a statement on Friday. “The strong job market helps Americans work on their financial goals, even though there are many challenges with affordability,” he said.
U.S. stock markets saw little change on Friday morning after the release of statistics from the Bureau of Labor Statistics.
Seema Shah, the chief global analyst at Principal Asset Management, said on Friday that the jobs report from today probably means the Federal Reserve won’t cut interest rates in March. “Even though the main payroll number is a bit disappointing, overall, the job market remains strong and wages are still rising.”
Investors and Federal Reserve officials are closely observing how President Donald Trump’s plans will impact the economy.
Shah said some of his policies “have the potential to significantly impact both the labor market picture and the inflation outlook,” adding that “there is every reason to keep rates on hold for now.” Trump recently said that it was a good choice for the Fed to keep interest rates the same last week. This came after he criticized the central bank just hours after their decision.
Some signs, like hiring rates and how many people are leaving their jobs, show that the job market is slowing down. Employers are being careful about hiring more staff, and workers are hesitant to leave their jobs. Other polls indicate that business leaders are hopeful that Trump will improve business conditions by introducing new tax cuts and reducing regulations, which could lead to more hiring.
“Hiring plans have increased everywhere,” said Eric Wallerstein, the main market analyst at Yardeni Research. He agreed that consumers won’t likely see lower borrowing rates that could ease their credit card and auto loan payments anytime soon.
Clearer interest rate forecasts usually help businesses grow, but Trump’s recent tariffs have caused market confusion. Some Wall Street experts have said they will change their growth predictions if he starts to carry out his plans. This could lead to expected responses from the countries affected.
In a research note this week ahead of the BLS report, Gregory Daco, chief economist at EY, said U.S. gross domestic product could contract by as much as 1.5% this year, with inflation climbing some 0.4 percentage points higher, based on the extent of Trump’s levies.
“Daco stated that growing uncertainty about trade policies will increase instability in financial markets and put pressure on businesses, even though the administration talks positively about supporting business.”
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