U.s. Labor Market Gains 130,000 Jobs In January As Unemployment Falls

The U.S. labor market appeared to pick up in January, with the economy adding 130,000 total nonfarm payroll jobs, according to data released Wednesday by the U.S. Bureau of Labor Statistics (BLS). The release of this data was delayed due to a partial government shutdown. 

Despite the strong gains in January, the jobs numbers for November 2025 were revised down from 56,000 jobs to 41,000 jobs, while December 2025 was revised down by 2,000 jobs to just 48,000 jobs added. On average, the U.S. economy added an average of 15,000 jobs per month in 2025. 

Unemployment remained little changed from December, falling slightly to 4.3% with 7.4 million people unemployed. Both of these figures are higher than they were a year ago, when the jobless rate was 4.0%, and the number of unemployed people was 6.9 million. 

“The jobs report beat estimates; the unemployment rate fell, and the internals of the report were fine too. All these items pushed bond yields higher, as they should have after the report,” Logan Mohtashami, HousingWire’s lead analyst, said. “One more positive report of 60K makes 2026 have more job growth than all of 2025, which ended the year at just 181,000 jobs created.”

The majority of January’s job gains occurred in health care (+82,000 jobs), social assistance (+42,000 jobs) and construction (+33,000 jobs).

Within the construction sector, residential building construction added 300 jobs, and residential specialty trade contractors added 5,600 jobs. The majority of the sector’s job gains occurred within nonresidential specialty trade contractor employment, which added 25,100 jobs. 

The federal government sector (-34,000 jobs) and financial activities (-22,000 jobs) both lost jobs during the month. The real estate sector also experienced a decrease in employment in January, losing 4,400 jobs. 

“Like a lot of economic data recently, today’s employment situation report offers a muddy picture of the health of the U.S. economy,” Lisa Sturtevant, the chief economist at Bright MLS, said in a statement. “Despite today’s report, there are other signs that the labor market is weakening, including fewer job openings and rising claims for unemployment insurance.” 

Economists say that the Federal Reserve is closely watching this labor market data. 

“If conditions are indeed weakening, the Federal Reserve will almost certainly cut rates this year. But it is going to depend on ongoing revisions to the employment numbers, along with other labor market data and Friday’s inflation report,” Sturtevant said. “Assuming inflation held steady in January, we could see at least one rate cut during the first half of 2026, but if job growth rebounds, it is harder to see a path toward multiple rate cuts this year.” 

Despite these confusing signals, economists still believe we will see a stronger spring homebuying season than we have in recent years. 

“From a housing market perspective, a stronger job market should improve consumer confidence and support demand this spring,” Mike Fratantoni, the senior vice president and chief economist at the Mortgage Bankers Association, said in a statement.