January Jobs Report: Early Signs of Potential Stabilization Emerge
January Jobs Report: Early Signs of Potential Stabilization Emerge
The January Employment Report data presents a nuanced picture of an economy potentially finding its footing after a sluggish year. While the addition of 130,000 jobs is modest by historical standards, it represents the strongest monthly gain since late 2024. Importantly, new annual revisions provided a clearer picture of the 2025 landscape, with last year’s total gains recalibrated from 584,000 to 181,000. With the unemployment rate ticking down to 4.3% and a slight rise in December hires, the significant slowdown of 2025 may be showing early signs of giving way to a renewed warming of hiring activity.
Sector Performance: The engines of growth
Healthcare dominance: The sector remains the primary engine of the labor market, adding 123,500 jobs this month (+82,000 healthcare & +42,000 social assistance), the majority of the jobs added overall.
Skilled trades: Construction and manufacturing continue to show resilience, remaining viable paths for job seekers.
Staffing: Temporary help services jobs are increasing, which can indicate a turning point in labor market strength.
Sector declines: Government, Information and Transportation sectors bucked the trend, reporting net job losses in January. Transportation being impacted by tariffs, and information following an end of year cool down in the broader technology sector.
Retail & Hospitality: Modest gains in these sectors provided a specific boost to entry-level and younger workers.
Demographic shifts & leading indicators
Unemployment benchmarks: The unemployment rate for Black workers fell by 0.3 percentage points (to 7.2%). As this is often a leading indicator for the broader market, the decline is a particularly optimistic signal.
Youth employment: Teenagers saw the most significant improvement, with their unemployment rate dropping 2.1 percentage points, likely buoyed by the service sector gains.
Underemployment: The number of individuals working part-time for economic reasons decreased, suggesting that full-time opportunities are becoming more accessible as the market heats up.
Wages & inflation
Steady growth: Average hourly earnings rose 0.4% in January, maintaining a 3.7% year-over-year increase.
Worker leverage: While wage growth is gently cooling from its peak, it remains elevated and is currently outpacing inflation, indicating that workers still retain a degree of bargaining power in the current environment.