The U.S. economy 130,000 jobs in January, more than twice as many as expected, and the unemployment rate fell to 4.3 percent, the Labor Department said Wednesday.
Economists had expected 55,000 jobs, although the range of forecasts was particularly wide, with some analysts predicting between zero jobs and 130,000. The unemployment rate was forecast to remain steady at 4.4 percent.The report was delayed a few days by the partial government shutdown.
The jobs growth came entirely from the private sector, which added 172,000 jobs. The federal government’s payrolls contracted by 34,000 while state and local government employment shrank by 8,000.
Construction added 33,000 in January and manufacturing employment climbed by 5,000. Durable goods manufacturing added 9,000 jobs and nondurables shrank by 4,000. The private sector’s services side added 136,000 jobs, primarily in the health and social services sector. Professional and business services added 34,000. Retail added 1,200 jobs.
There were notable contractions in information technology payrolls and financial services, which may reflect the growth of artificial intelligence in those sectors.
Jobs figures can be volatile month to month. Many economists look to the three-month average for a view on the underlying strength of the labor market. On average, the economy has added 73,000 jobs since November and the private sector has added 103,000.
The numbers released Wednesday were all the more extraordinary because labor market dynamics reflect a significant shift away from dependence on an immigration-driven workforce. Jobs numbers that may seem anemic compared with recent years may actually indicate healthy—even robust—growth under current conditions, according to economists.
Many economists now estimate the so-called “break-even” rate of job growth—the rate required to keep unemployment from rising—may be as low as 30,000 and could hit zero later this year. By contrast, when immigration was running at higher levels from 2021 through 2024, the economy needed to add more than 100,000 jobs monthly to keep pace with labor-force growth.
Retirements are also driving down the growth of the labor force, as an increasing number of members of the large baby boom generation leaves work and later, smaller generations fail to fully replace them. Last year, job growth was held back by the Trump administration’s focus on shrinking government payrolls, part of it’s program to “reprivatize” the U.S. economy.
Federal Reserve Chairman Jerome Powell at his press conference last month said it’s possible that the economy could remain healthy and the labor market at full employment with zero jobs added each month. “Is that full employment? In a sense it is. If demand and supply are in balance, you know, you could say that’s full employment,” Powell said.
“We have to revise our expectations down significantly for what a monthly job number should look like,” White House trade adviser Peter Navarro said in an interview Tuesday on Fox Business.
On Monday Kevin Hassett, the president’s top economic adviser, told CNBC that immigration restriction and deportations mean the economy needs fewer jobs. He also said artificial intelligence may weigh on job growth.
Meanwhile, businesses have increased capital investment, according to Commerce Department data. Productivity growth has accelerated as companies shift toward innovation and getting more output from their current workers to fuel growth, Labor Department figures show. In the third quarter of 2025, productivity rose at a 4.9 percent rate. If sustained, that could mean extraordinary strong economic growth.
On Wednesday, the Labor Department also released substantial downward revisions to employment figures going back two years as part of its regular adjustment process. According to the revised data, job growth in 2024 totaled 1.2 million positions—roughly 800,000 fewer than initial estimates of 2 million. The revisions also showed employment gains over the past year fell to 181,000, down from earlier calculations of 584,000.
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