Job creation was weaker than expected for the first month of 2025, even as unemployment edged down.
Nonfarm payrolls climbed 143,000 in January, according to data from the Bureau of Labor Statistics (BLS) released on Friday, boosted by gains in the healthcare, retail, and social assistance industries. That’s well below Wall Street’s expected 170,000 jobs for the month, according to estimates compiled by FactSet (FDS-0.08%).
Unemployment for the month fell slightly to 4.0%. Analysts had expected unemployment to remain unchanged from 4.1% in December.
In a statement, the BLS noted that neither raging wildfires in Southern California nor severe winter weather had a “discernible effect” on national payroll employment for January.
The BLS said nonfarm payrolls were revised upward for November and December to 261,000 and 307,000, respectively. That represents a collective 100,000 more jobs than previously reported.
Chris Zaccarelli, the chief investment officer at Northlight Asset Management, said in a statement that while job growth appears to be slowing, it’s somewhat typical for January after December’s end-of-year surge. The larger concern is what comes next, as President Donald Trump gets the U.S. entangled in a potential trade war.
“While we remain cautiously optimistic in early 2025, we see much more downside potential this year than we have in the prior two years and believe now is a time for caution and a dialing back of risk-taking,” Zaccarelli said.
Last August, the BLS’s preliminary benchmark revision estimated that the number of workers on payrolls would likely be revised down by 818,000 for the 12-month period through March 2024. On Friday, the agency revised down its initial report by 598,000.
It’s the largest downward revision since 2009 when the BLS subtracted 824,000 from its initial reports. The next biggest revision came in 2019 when the BLS subtracted 501,000 jobs from its preliminary estimates.
The revisions show that job growth wasn’t as strong as initially reported throughout 2023 and early 2024. However, most economists maintain that the labor market was solid.
Private companies added more jobs than expected in January, payrolls processing firm ADP (ADP-0.55%) said Wednesday, reporting that companies added 183,000 jobs last month. Annual pay rose 4.7% year-over-year.
The report gave some economists confidence that the Federal Reserve will continue to hold interest rates steady and maintain its focus on controlling near-term inflation.
After three straight meetings that resulted in cuts, the Federal Open Market Committee (FOMC) last month decided to keep the benchmark federal funds rate at 4.25%-4.50%. In the final months of 2024, the FOMC slashed rates by a full percentage point.
Fed Chairman Jerome Powell said that the central bank would need to see “real progress” on inflation or weakness in the labor market before making adjustments. “We do not need to be in a hurry to adjust our policy stance,” he told reporters on Jan. 29.
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