U.S. employers added just 143,000 jobs in January, well below expectations, while the unemployment rate edged down to 4%.
The first jobs report of Donald Trump’s second presidency suggests he inherited a stable but slowing labor market. Job creation fell sharply from 307,000 in December and 263,000 in November, missing economist forecasts of 170,000 new jobs.
Wages rose faster than expected, with average hourly earnings increasing 0.5% from December and 4.1% year-over-year. While good news for workers, the uptick could complicate the Federal Reserve’s plans to ease interest rates.
Healthcare leads hiring, but mining jobs decline
The strongest job growth came from healthcare, which added 44,000 positions, though that’s down from last year’s monthly average of 57,000. Retailers hired 34,000 workers, while government agencies added 32,000. However, mining companies shed 8,000 jobs, highlighting the uneven nature of job growth.
Trump’s federal hiring freeze casts uncertainty
A federal judge temporarily blocked Trump’s plan to push out government workers through buyouts, but his administration’s hiring freeze, imposed on January 20, could further slow employment growth. The freeze wasn’t in place when January’s data was collected, meaning its impact will show in upcoming reports.
Trade war fears loom over job market
Economists are also worried about Trump’s aggressive trade policies. He has already imposed a 10% tariff on Chinese imports and is threatening steep new duties on Canada, Mexico, and the European Union.
While Trump gave Canada and Mexico a 30-day reprieve from a planned 25% tariff hike, his demands for stronger border security and drug enforcement add uncertainty to trade negotiations. A trade war could raise costs for American businesses, fuel inflation, and force the Federal Reserve to rethink planned interest rate cuts.
Hiring slows, but layoffs remain low
The U.S. job market has cooled significantly from the post-pandemic boom. Employers added 2.2 million jobs in 2024, down from 3 million in 2023, 4.5 million in 2022, and a record-breaking 7.2 million in 2021. Job openings have also declined, falling from 12.2 million in March 2022 to 7.6 million in December.
Fewer job openings mean workers are less confident about switching jobs for better pay. The number of people quitting has dropped from a peak of 4.5 million in April 2022 to just 3.2 million in December, dipping below pre-pandemic levels.
Revisions may show weaker job growth than reported
On Friday, the Labor Department is set to release revisions that could downgrade job growth estimates from April 2023 to March 2024. A preliminary report from August suggested 818,000 fewer jobs were created during that period than initially thought, which would lower monthly hiring averages from 242,000 to 174,000.
If confirmed, these revisions will officially adjust government payroll records, further emphasizing the slowdown in job creation as Trump’s second term begins.
