Topline
The first jobs report since President Donald Trump’s inauguration came out Friday morning, falling short of headline expectations in the weakest start to a year for overall job growth since before the COVID-19 pandemic, though other data points revealed a resilient labor market.
Friday is the first jobs report since Trump’s inauguration.
Key Facts
January’s employment update at 8:30 a.m. EST revealed the U.S. economy added 143,000 non-farm payrolls from December to January, on a seasonally adjusted basis.
Economists expected 170,000 new jobs, according to consensus economist forecasts compiled by FactSet.
But the unemployment rate was 4% last month, beating estimates of 4.1%, where it stood in December.
And average hourly wages increased 4.1% year-over-year to a new record of $35.87, compared to forecasts calling for average hourly wages to increase by 3.8% to pay of $35.80.
The government also reported 100,000 additional jobs added in November and December than previously shared.
Contra
Friday’s report provided evidence of slowing expansion. The 143,000 jobs added would be the weakest January total since 2016. January is the ninth consecutive month of at least 4% unemployment, after the U.S. spent all of Feb. 2022 to April 2024 below that mark.
Crucial Quote
“Aside from a slightly disappointing headline payrolls number, the broader picture is still one of labor market resilience and sustained wage pressures,” Seema Shah, Principal Asset Management’s chief global strategist, wrote in emailed comments.
What To Watch For
How investors will react to the report. It would likely take an “outlier print” of less than 100,000 or more than 250,000 January jobs added to significantly move markets, predicted Bank of America economists led by Aditya Bhave. Stock futures were flat after Friday’s release.
Tangent
Weather often impacts nonfarm payrolls, and Friday’s wasn’t an exception: The California wildfires and extreme winter weather each knocked off about 20,000 jobs added than typical in January, according to Goldman Sachs.
Key Background
The December jobs update released Jan. 10 caused a significant selloff, as the S&P 500 declined 1.5% to a two-month low and yields for the benchmark 10-year U.S. Treasury rose to their highest level since 2023 (higher bond yields signal less valuable bonds). That came as Wall Street interpreted the better-than-expected December report as a death knell for further interest rate cuts in the near term, and the Fed signaled later that month it had in fact put its rate-cutting plans on the back burner. In short, Wall Street is hoping for lower rates to boost stock market valuations as corporate profit margins would benefit from cheaper borrowing costs, while the Fed is less likely to enact those cuts if the economy and labor market is not in need of a boost.
Further Reading
ForbesStocks Drop After Jobs Report Shows Hot U.S. Labor Market—Here’s WhyBy Derek Saul
