The Line: Job Growth Much Higher than Expected in January

This week, we dedicate this column to the delayed January jobs report.

Job Growth Much Higher than Expected in January

Yep, you read that correctly. Payrolls rose by 130,000 last month according to the Bureau of Labor Statistics, more than double the Dow Jones estimate. Wait a minute, didn’t the ADP report issued last week say that employment was up by just 22,000 in January? Well, that figure only includes the private sector, but since the BLS had government employment down by 42,000 in January, that’s not the reason for the huge difference.

We’ve talked a lot about the differences between the ADP and BLS employment reports, but for those who want a refresher you can find a good summary here.

Here are the highlights of the BLS report for January:

• Private sector payrolls rose by 172,000 last month, while government employment fell by 42,000. Federal government employment has declined by 327,000—or 10.9%—since October 2024.
• The unemployment rate fell to 4.3% from 4.4% the previous month.
• Wages rose 0.4% in January, which was higher than expected, and are up 3.7% over the past year.
• Benchmark revisions to prior data subtracted 898,000 jobs in the year ending March 2025.
• Changes to the BLS’s birth-death model—which estimates employment changes due to business openings and closings—reduced job growth for all of 2025 down to just 181,000.

I know that’s a lot of information, so here’s what you need to know:

1. While job growth in January may be revised downward in future reports, this report is enough to keep the Fed from cutting rates for a while. Futures markets don’t see any real chance of a rate cut until the Fed’s June meeting.
2. Wages are still rising faster than prices, so consumer spending should remain decent.
3. Last year was not a good one for hiring, and 2026 may not be much better. But remember that consumer spending drives GDP growth, not hiring, so a recession is unlikely this year.

Happy Valentine’s Day

I want to wish everyone a Happy Valentine’s Day, especially my wife Jo-Ann. While we should tell the people we love that we love them more than once a year, it’s nice to have a day when the focus is on love.