US job growth accelerated in January, with nonfarm payrolls increasing by 130,000 jobs, according to the Labor Department’s Bureau of Labor Statistics.
This marks an improvement from the downwardly revised 48,000 jobs added in December. Economists had forecast a gain of 70,000 jobs, with estimates ranging from a loss of 10,000 jobs to a gain of 135,000.
The better-than-expected increase in payrolls was partly due to fewer holiday-related hires in seasonally sensitive industries like retail and delivery companies. January typically sees a spike in holiday-related layoffs, but with fewer workers hired, layoffs were likely reduced, leading to higher payroll gains.
The labour market has continued to be affected by trade policy, notably President Donald Trump’s recent threat of additional tariffs on European allies, which was later reversed. The report, which was initially due last Friday, was delayed by the three-day government shutdown.
In January, the Bureau of Labor Statistics updated its birth-and-death model, which estimates jobs gained or lost due to business openings and closures. This adjustment, incorporating current sample information each month, could result in up to 50,000 fewer jobs being counted in payroll growth than previously reported.
Despite the payroll increase, the US labour market remains sluggish, with concerns about job security and high inflation affecting public approval of Trump’s handling of the economy. Economists attribute much of this to the administration’s trade and immigration policies but expect tax cuts to boost hiring this year.
The Federal Reserve, which recently kept its benchmark interest rate unchanged at 3.50%-3.75%, will continue to monitor inflation and economic conditions. White House economic adviser Kevin Hassett warned that slower labour force growth could lead to lower job gains in the coming months, with the Census Bureau reporting a population increase of just 1.8 million people, or 0.5%, in the year ending June 2025.
Given the shrinking labour force, economists believe the economy needs to create around 50,000 jobs per month, or fewer, to keep pace with growth in the working-age population.
