US job growth slows but unemployment stays low

Job growth in the US slowed last month but unemployment remained low, in a sign of a solid, if more subdued economy.

Employers added 143,000 jobs in January, while the unemployment rate slipped to 4% from 4.1%, according to the Labor Department report.

The figures set the stage as US President Donald Trump enters the White House promising a major shake-up, including cuts to government spending and the federal workforce, mass migrant deportations and higher tariffs on many goods coming into the US.

The proposals have raised uncertainty about the path ahead for the world’s largest economy.

Last month, the US central bank cited questions about the future as it announced it would not cut interest rates, hitting pause after a series of cuts that had started in September.

Federal Reserve chairman Jerome Powell also said the bank’s concerns about the job market had subsided.

Despite the slowdown in jobs growth last month, analysts said they did not see much in the report to spark new worries, noting revisions to earlier data indicating that job growth in November and December was stronger than previously estimated.

“A lower-than-expected January payrolls number was more than offset by upward revisions to November and December’s totals and a downtick in the unemployment rate,” said Ellen Zentner, chief economic strategist for Morgan Stanley Wealth Management.

“Those who’d hoped for a soft report that would nudge the Fed back into rate-cutting mode didn’t get it.”

Employers in health care and retail sectors drove the job gains in January, which came as the country was hit by wildfires and winter storms.

Average hourly pay was up 4.1%, compared with January 2023, according to the report.

The report was affected by annual revisions, which incorporate more detailed data on job growth.

Those showed fewer job gains in 2024 overall than previously estimated. US shares were little changed after the news.

White House spokeswoman Karoline Leavitt said the report showed “the Biden economy was far worse than anyone thought, and underscores the necessity of President Trump’s pro-growth policies”.

Despite the revisions, the latest report suggested that the job market is more stable than it was just a few months ago, said Samuel Tombs, chief US economist for Pantheon Macroeconomics, which said it was no longer expecting the Fed to cut rates in March.

“All told, the economy created fewer jobs than we previously thought last year, but the trend no longer appears to be deteriorating,” he said.

He warned that the firm still expected a “relapse” in jobs growth “given the muted level of hiring indicators and elevated uncertainty about the new administration’s economic policies”.