US job market regains momentum in January but deeper cracks persist beneath the surface – The Times of India
After months of near-standstill, the US labor market showed fresh life in January. Employers added 130,000 jobs, the strongest monthly gain since December 2024, and the unemployment rate edged down to 4.3% from 4.4%. Wages rose as well. On the surface, it looks like a clean rebound. Underneath, the picture is much more uneven.
Care economy leads the rebound
Healthcare and social assistance once again did most of the heavy lifting, accounting for a large share of new jobs. Positions such as home health aides, residential care workers, and hospital staff continued to expand, largely insulated from broader economic ups and downs. This resilience reflects demographic realities—an aging population needs care regardless of the cycle—offering both reassurance about ongoing demand and a warning about the narrow breadth of growth.
Mixed signals across industries
Beyond health and care, the momentum was uneven. Professional and business services added jobs, but financial activities and information shed a combined 34,000 positions. Trade, transportation, and utilities cut 9,000 roles, underscoring persistent fragility in parts of the white-collar economy.
There were a few bright spots. Manufacturing posted its first employment gain in more than a year—a modest but symbolic turn. Construction employment rose by 33,000, powered by a race to build data centers and other infrastructure for artificial intelligence and cloud computing.
From paralysis to recalibration
Economists describe the upturn as a thaw after a stretch of hesitation. Sweeping tariff announcements in 2025 led many companies to delay investments and hiring. Recent activity suggests firms are adjusting to new conditions rather than retreating entirely.
Revisions reset the baseline
January’s improvement looks stronger against a newly lowered baseline. Annual benchmark revisions from the Bureau of Labor Statistics cut job growth estimates over the past two years. The economy is now estimated to have created 1.5 million jobs in 2024, not the previously reported 2 million. For 2025, growth was revised down to 181,000 from 584,000, reflecting both the benchmark adjustments and methodological changes to how new business formations and closures are estimated. Against that backdrop, January’s 130,000 jobs dwarf December’s 48,000 gain and exceeded economists’ expectations of about 55,000. All figures are seasonally adjusted.
Implications for the Federal Reserve
The Federal Reserve, which kept rates unchanged in late January after three consecutive cuts, is unlikely to see clear justification for further easing in this report. Several indicators support patience: fewer people were working part-time because they couldn’t find full-time positions; the number unemployed for more than six months declined; and the median duration of unemployment fell to 11.1 weeks from 11.4 weeks in December. At the same time, average hourly and weekly earnings ticked higher, a reminder that demand remains firm enough to keep upward pressure on pay. For inflation hawks, the message is stabilization, not deterioration.
Stability masks strains
Stability, however, is not the same as dynamism. The unemployment rate for workers with at least a bachelor’s degree edged up to 2.9%. Layoffs remain selective rather than widespread, but high-profile job cuts at major firms show how uneven the landscape is. Many companies have slowed or frozen hiring instead of resorting to mass layoffs. That approach creates bottlenecks—new graduates face a tighter path into professional roles, and those out of work for a long period still struggle to reenter the market.
Data disruptions muddy the view
Short-term disruptions also complicate interpretation. The January release was delayed by a brief partial government shutdown, and a longer shutdown last fall hindered real-time tracking of labor conditions. In addition, workforce reductions initiated by the administration through layoffs and buyouts weighed on 2025 employment figures, particularly in the federal sector. These factors add noise to an already complex trend picture.
Sentiment and what comes next
Consumer sentiment in early February improved to 57.3, a gain in recent months but still below 64.7 a year earlier, suggesting confidence is recovering slowly and unevenly. Looking ahead, last summer’s tax-and-spending package—which included investment incentives and tax cuts—could support stronger hiring in 2026. Whether those measures offset ongoing inflation concerns and tariff-related uncertainty remains to be seen.
Overall, the January report neither declares a boom nor confirms weakness. It depicts a labor market that bends without breaking: expanding modestly, heavily reliant on healthcare and related services, and shadowed by downward revisions that temper enthusiasm. For the Fed, the takeaway is restraint. For businesses, cautious forward motion. And for workers—especially new entrants—the recovery remains conditional. The job engine hasn’t fully reignited, but January shows there is still fuel in the tank.
