The U.S. economy added about 143,000 jobs in January, according to the Bureau of Labor Statistics – and while that is less than the 161,000 that some economists had predicted, it is enough to reduce the likelihood of a Fed rate cut at the next FOMC meeting in March.
The unemployment rate edged down to 4.0%.
Industry sectors that saw the strongest job gains included health care, retail trade, and social assistance. Employment declined in the mining, quarrying, and oil and gas extraction industry.
As of the end of January there were about 6.8 million unemployed – basically flat compared with December.
The number of long-term unemployed stood at 1.4 million, also flat compared with the previous month. The long-term unemployed accounted for 21.1% of all unemployed people, according to the BLS.
The labor force participation rate was basically flat at 62.6%, as was the employment-population ratio at 60.1%.
The average hour wage for employees on private nonfarm payrolls increased by 17 cents, or 0.5%, to $35.87. Over the past 12 months, average hourly earnings have increased by 4.1%.
In January, average hourly earnings of private-sector production and nonsupervisory employees increased by 16 cents, or 0.5%, to $30.84.
“January’s mixed report reinforces the Federal Reserve’s cautious approach as 2025 gets underway,” says Sam Williamson, senior economist for First American, in a statement. “The Fed has emphasized the need for either ‘real’ inflation progress or ‘some’ labor market weakness before delivering additional rate cuts and the January jobs report provided neither, likely keeping rate cuts off the table until May/June at the earliest.”
This was “not the jobs report home buyers were looking for,” First American says, as it will likely result in higher mortgage rates and increased borrowing costs.
“Borrowing costs, including mortgage rates, are likely to stay elevated for an extended period, reducing the potential for a strong housing market rebound in the spring,” Williamson says. “Overall, mortgage rates are expected to drift modestly lower to the mid-to-low 6 percent range by year-end, though unexpected labor market or economic downturns could cause rates to fall more quickly.”
Photo: Saulo Mohana