US job growth accelerates in January, unemployment rate falls to 4.3%

WASHINGTON - US job growth accelerated in January and the unemployment rate fell to 4.3 per cent, signs of labour market stability that could give the Federal Reserve room to keep interest rates unchanged for some time while policymakers monitor inflation.

Non-farm payrolls increased by 130,000 jobs in January after a downwardly revised 48,000 rise in December 2025, the Labor Department’s Bureau of Labor Statistics (BLS) said on Feb 11. Economists polled by Reuters had forecast payrolls advancing by 70,000 jobs. Estimates ranged from a loss of 10,000 jobs to a gain of 135,000 positions. The unemployment rate fell from 4.4 per cent in December.

Part of the better-than-expected increase in payrolls was because seasonally sensitive industries like retailers and delivery companies hired fewer holiday workers than usual in 2025. January is typically the biggest month for holiday-related layoffs. Given the low seasonal hiring, layoffs were probably fewer, lifting payroll gains.

Trade policy continued to cast a shadow on the labour market, they said, in a nod to President Donald Trump’s threat in January of additional tariffs on European allies for rebuffing his demands for the US to buy Greenland. Mr Trump later abruptly backed down.

The employment report, initially due on Feb 6, was delayed by the three-day shutdown of the federal government.

Effective with the January report, the BLS updated the birth-and-death model by incorporating current sample information each month. This model, which is a method the BLS uses to try to estimate how many jobs were gained or lost because of companies opening or closing in a given month, has been blamed for an overcounting of payrolls.

The update to the birth-and-death model, which follows the same methodology applied to the April-October 2024 estimates after the annual benchmark payrolls revision, could result in as many as 50,000 fewer jobs added to payroll growth than in recent months, economists estimated.

Despite the increase in payrolls in January, the labour market remains lacklustre and has struggled even as economic growth has been robust. Anxiety over jobs and high inflation has eroded Americans’ approval of Mr Trump’s handling of the economy.

Economists said the Trump administration’s trade and immigration policies have chilled the labour market, though they expected tax cuts to boost hiring in 2026. The US central bank in January left its benchmark overnight interest rate in the 3.5 per cent to 3.75 per cent range.

White House economic adviser Kevin Hassett on Feb 9 warned of lower job gains in the months ahead because of slower labour force growth. The Census Bureau last week said the nation’s population rose by just 1.8 million people, or 0.5 per cent, to 341.8 million in the year ending June 2025.

Mr Trump made cracking down on US immigration a cornerstone of his election campaign. The BLS will in March introduce new annual population controls for the household survey with February’s employment report after they were delayed by the 43-day government shutdown in 2025. These adjust for updated population estimates, including migration.

The unemployment rate is derived from the household survey.

Given the reduction in the labour force, economists believe the economy needs to create about 50,000 jobs a month or even less to keep up with growth in the working-age population. REUTERS