US Job Growth Slows as Unemployment Rate Holds at 4%

US job growth slowed more than expected in January following strong gains in the previous two months, but the unemployment rate remained at 4.0%, potentially giving the Federal Reserve reason to delay interest rate cuts until at least June.

The Labor Department’s closely watched employment report on Friday also showed a surge in average hourly earnings, supporting consumer spending and reinforcing labour market resilience as a key driver of economic expansion.

“This morning’s report may be considered a Goldilocks report, not too hot and not too cold,” said Jeffrey Roach, chief economist at LPL Financial. “An unemployment rate at 4% is considered very low, giving the Fed reason to keep fed funds unchanged in the near term.”

Nonfarm payrolls increased by 143,000 jobs in January, following an upwardly revised gain of 307,000 in December. The slowdown was seen as a correction after payrolls surged by 261,000 in November. Economists polled by Reuters had expected 170,000 new jobs, with estimates ranging from 60,000 to 250,000.

The Bureau of Labor Statistics (BLS) stated that January’s wildfires in Southern California and severe cold in other regions had “no discernible effect” on payrolls. However, the household survey recorded 573,000 people unable to work due to weather conditions—the highest for any January since 2011.

The healthcare sector led job gains, adding 44,000 positions across hospitals, nursing and residential care facilities, and home health services. Retail employment rose by 34,000 jobs, mostly at general merchandise retailers, while social assistance payrolls increased by 22,000.

Government employment grew by 32,000 positions, though hiring in that sector is expected to slow as the Trump administration moves to cut federal jobs.

Employment remained largely unchanged in construction, manufacturing, wholesale trade, transportation and warehousing, information, financial activities, professional and business services, and the leisure and hospitality industry.

Following the report, US Treasury yields climbed, the dollar strengthened against a basket of currencies, and stock markets opened mostly flat.

Faridah Abdulkadiri

Follow us on: