Khaberni - The U.S. economy added 130,000 jobs in January, exceeding market expectations, indicating an improvement in the U.S. labor market, which contrasts with a series of recent pessimistic reports.
The figures released on Wednesday by the Bureau of Labor Statistics were almost double the expected number of 68,000 jobs according to a Bloomberg survey of economists, and much higher than the revised down number of 48,000 jobs added in the previous month. The unemployment rate decreased slightly to 4.3%.
This unexpectedly positive start to the year surprised the markets, after recent reports indicated a weakening labor market, with rising layoffs, a decrease in available jobs, and an increase in unemployment insurance claims.
Stephen Brown from "Capital Economics" said: "This was undoubtedly a strong report. There was a wide range of expectations before the data was released... in the end, it seems that no one was correct."
This data will bolster the argument of the outgoing Federal Reserve Chair, Jay Powell, that the labor market shows "signs of stabilizing", after the central bank halted its interest rate-cut campaign last month.
According to the "Financial Times", U.S. Treasury yields jumped as investors pulled back their expectations for interest rate cuts this year. The yield on two-year bonds, which is particularly sensitive to monetary policy, rose by 0.1 percentage points to 3.55%, the highest level in a week.
Futures market traders, who had been expecting two or three interest rate cuts by December, significantly reduced their expectations to just two cuts now.
At the opening of trading, the Standard & Poor's 500 index rose by 0.7%, while the Nasdaq Composite index climbed by 0.8%.
Blake Gwinn, head of U.S. rate strategy at "RBC Capital Markets", said, "The Federal Reserve is not going to back down. There is a broad consensus that we are in a wait-and-see mode for the next Federal Reserve meeting, if not the next two meetings."
The White House also seemed to be preparing for weaker data this week. Peter Navarro, Trump's chief trade advisor, told Fox Business on Tuesday: "We need to significantly revise our expectations for monthly job numbers."
President Donald Trump quickly exploited the Wednesday report, praising the "great job numbers, which greatly exceeded expectations," repeating his calls for the Federal Reserve to lower borrowing costs. Trump wrote on his platform "Truth Social": "We are once again the strongest nation in the world, and therefore we should pay significantly lower interest rates."
The latest figures came after private data released last week by "Challenger, Gray & Christmas" employment services group showed that U.S. employers cut a larger number of jobs in January than at any start of the year since 2009.
A separate report from "ADP," specializing in payroll services, pointed to a slowdown in hiring in January, adding only 22,000 jobs.
Ian Lyngen, head of U.S. rates strategy at Bank of Montreal Capital Markets, said: "The private data preceding these figures indicated a different picture." He added that the discrepancy between these numbers and the Bureau of Labor Statistics data "will likely remain a significant topic as the market analyzes these figures."
As expected, the U.S. Bureau of Labor Statistics (BLS) on Wednesday revised its estimates for job gains over the past year from 584,000 to 181,000 after seasonal adjustment, confirming a sharp slowdown in hiring in 2025 after years of strong growth. The employment level for March 2025 was revised down by 898,000 during the annual reassessment process conducted by the office.
Analysts warned that there are still risks to the labor market, and seasonal hiring might obscure the real picture.
Thomas Simons from "Jefferies" said: "We are not particularly optimistic about the short-term outlook for the labor market." He added: "Recent weeks' data on unemployment insurance claims suggest that the seasonal boost to labor market data is approaching its end."
The job gains in January were driven by the healthcare, social assistance, and construction sectors, while jobs in finance and federal government sectors declined.
The report release on Wednesday was delayed from last week due to the recent partial government shutdown.
