The U.S. economy posted solid job growth in January, with employers hiring at a steady pace as the Federal Reserve weighs potential rate cuts in the months ahead.

The Labor Department reported Wednesday that employers added 130,000 jobs, well above economists’ expectations of 70,000, according to LSEG. The unemployment rate fell slightly to 4.3%, under the predicted 4.4%. The report, originally scheduled for Feb. 6, was delayed due to a brief partial government shutdown.

Sector Highlights

  • Private payrolls rose by 172,000 jobs, exceeding expectations of 70,000.
  • Government payrolls declined 42,000, with cuts at the federal (-34,000) and state (-18,000) level partially offset by gains at local governments (+10,000). Federal workforce numbers are down 327,000 jobs since the October 2024 peak, a 10.9% decline.
  • Manufacturing added 5,000 jobs, surpassing expectations of a 5,000-job loss.
  • Healthcare gained 81,900 jobs, with ambulatory services (+50,300), hospitals (+18,300), and nursing/residential care (+13,300) leading the way. This significantly exceeds the sector’s 2025 monthly average of 33,000.
  • Construction added 33,000 jobs, mainly in nonresidential specialty trade contracting (+25,100). The sector was essentially flat in 2025.
  • Financial services lost 22,000 jobs, leaving the sector 49,000 below its May 2025 peak; insurance carriers and related activities accounted for 11,300 of those losses.

Workforce Context

  • The long-term unemployed (jobless for 27+ weeks) remained at 1.8 million, up 386,000 from a year ago, accounting for 25% of all unemployed.
  • Part-time workers for economic reasons fell by 453,000 to 4.9 million but remain 410,000 higher than last year.
  • Labor force participation was 62.5%, and the employment-population ratio 59.8%, largely unchanged from 2025.

January’s report demonstrates that hiring remains steady in the private sector, particularly in healthcare and construction, while government payrolls continue to shrink. Analysts note that these numbers provide important context for monetary policy decisions and broader economic trends heading into 2026.