A Good, Better, & Bad Jobs Report

Employment growth surprises to the upside in January

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Job growth surprised to the upside in January, with U.S. payroll employment rising by 130,000. That’s the good news.

The better news is that the unemployment rate ticked down for the second straight month and, at 4.3%, is in much better shape than in November (4.5%). The prime age (25-54) employment to population ratio is also in really great shape.

This will be reassuring to the Fed.

Now for the bad news: after pretty serious downward revisions, we averaged just 15,000 jobs per month in 2025. That’s the worst non-recessionary calendar year of growth since 2003, and you have to go back decades earlier than that to find another one so bad.

And even that might understate 2025’s labor market weakness, because virtually all recent job growth has occurred in the healthcare segment.

Seriously, since January 2024 the healthcare and social assistance sector has added 1.6 million jobs. All other sectors combined have lost a combined 27,500 jobs over that two-year period.

Even with January’s upside surprise, job growth will likely remain unusually slow in 2026.

In one sense, that’s okay. Given demographic dynamics and a lack of immigration, it won’t take many new jobs to keep the unemployment rate steady.

In another sense, this low hire, slow employment growth environment is less okay. Just ask anyone who’s currently searching for a job outside of healthcare.

The Upshot

We’re in the midst of a jobless economic expansion. That’s pretty weird.

The Fed’s takeaway from today’s jobs report will be that unemployment is steady and there’s no need to cut.

What’s Next

This week is loaded with important data releases (beyond just this one), including a big consumer price index update on Friday. We’ll cover that and more in Week in Review, our every-Friday post that gives you everything you need to know about the economy in a breezy, five-minute read.

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