Inside the Latest Jobs Report

The employment report for January was better than had generally been expected, with the economy adding 130,000 jobs. As has been the case for the last year, the bulk of the job creation was in health care, which added 86,000 jobs, nearly two-thirds of the total. Over the last year, health care accounted for 121.7 percent of the job gains.

The household data reversed many of the trends we have seen in recent months. In addition to the drop in unemployment, the number of people who report working part-time involuntarily fell by 450,000, although it is still 410,000 above the year-ago level. The unemployment rate for Black workers fell by 0.3 percent, but it is still 1.0 percentage point (p.p.) above the year-ago level. And the share of unemployment due to quits rose to 13.7 percent, up from 11.1 percent last month.

Benchmark Revision Reduces Job Growth Over the Last Year

The annual benchmark revision lowered reported jobs for 2025 by more than 240,000. With January gains, year-over-year growth was 359,000, an average of just 30,000 a month. The story in the private sector is somewhat better, with a year-over-year gain of 615,000, as the federal government lost 324,000 workers over the year. (State and local governments both added workers.)

In addition to the 436,900 health care jobs created in the last year, restaurants were also big job gainers, adding 153,600 jobs. The category of individual and family services added 313,300 jobs over the year and 38,300 in January.

Goods Sector Fared Poorly in 2025

The manufacturing sector lost 83,000 jobs over the last year, although it did gain 5,000 jobs in January. This is the first rise since a gain of 14,000 in November of 2024. Construction added just 44,000 jobs over the last year compared to 141,000 in the prior year. It added 33,000 in January, accounting for the bulk of the growth.

Coal mining lost 1,000 jobs over the last year, while oil and gas extraction lost 4.500. The category of support activities for mining, which is mostly for oil and gas, lost 9,600 jobs, which is 3.5 percent of employment in the sector.

Wage Growth Remains Healthy

The average hourly wage rose 3.8 percent over the last year, which was also the increase for production and non-supervisory workers. This is still a modest slowing from the 4.0 percent rate of wage growth in 2023 and 2024, but it is outpacing inflation by roughly a percentage point.

Retail and Scientific Research Were Also Big Job Losers in 2025

The retail sector lost 56,400 jobs over the year and 1,200 in January. Most of this loss was in building and garden supplies, which lost 35,600 jobs over the year and 19,500 in January. Trucking lost 30,500 jobs over the year and 4,300 in January.

Scientific research lost 17,000 jobs over the year, which came to 1.8 percent of employment. Private education gained 15,100 jobs over the year, but that is down from 107,700 in 2024 and 158,700 in 2023.

Women Cross 50 Percent of Payroll Employment

The share of women in payroll employment crossed 50 percent for the first time since the pandemic. Women had accounted for slightly more than 50 percent of total employment in some months before the pandemic, but their share fell sharply following the pandemic, which hit sectors that disproportionately employed women, like hotels and restaurants. The strong growth in healthcare and social service employment has made up for these losses.

Employment-to-Population Ratio (EPOP) for Prime Age Workers Rises 0.2PP

The EPOP for prime age workers rose 0.2 p.p. to 80.9 percent, tying the high for the recovery hit in several months in 2023 and 2024. The percentage point increase was the same for men and women, with the 86.6 percent rate for men 0.1 p.p. below the high hit in July of 2024 and the 75.3 percent rate for women 0.4 p.p. below the high reached in May of 2024.

Unemployment Rate for Black Workers Falls to 7.2 Percent

The rise in unemployment for Black workers in 2025 has been striking, but the reported rate has fallen in the last two months from 8.2 percent to 7.2 percent. The monthly data are erratic so it’s likely that either the rise was partly due to measurement error or that the fall reported for January is. The increase in the unemployment rate for Black women over the last year has been larger than for Black men, 0.9 p.p. compared to 0.5 p.p., but the current unemployment rate for men is higher 7.3 percent, compared to 6.3 percent.

Unemployment Rate for Young Workers Falls to 7.1 Percent

The rate of unemployment for young workers, ages 20-24, had jumped to 9.2 percent in September. Since these workers are just entering the labor force, many will have difficulty finding jobs in a weak labor market. However, their unemployment rate fell by 1.1 p.p. in January and is now 0.9 p.p. below its year ago level.

In a similar vein, the share of unemployment due to people who had voluntarily quit their jobs rose to 13.7 percent from 11.1 percent in December. This is where we would expect it to be in a strong labor market. The share of long-term unemployed (more than 26 weeks) edged down from 26.0 percent in December to 25.0 percent, but that is still up from 21.1 percent last January. The other duration measures of unemployment also fell. And the share of multiple jobholders fell back to 5.3 percent, the same as the rate a year ago.

On the Whole, a Surprisingly Positive Report

Both the establishment and household survey look considerably better than most analysts had expected. Job growth for the month was well above most forecasts. It was hugely concentrated in health care and social services, but the absolute number was strong.

The household survey reversed many of the disturbing trends we had seen over the last year, notably the sharp rise in unemployment for Black workers and young people. The big jump in unemployment due to quits is also encouraging.

We need all the usual qualifications; this is just one month’s data. It also seems to be at odds with the weakness in the ADP and Indeed data, as well as the JOLTS. In this respect we must also remember the data is for January, a month in which we expect some very bad weather. While we did see bad weather last month, it all occurred in the second half of the month, after the reference period. So weather may actually have been a factor making this report better than it would otherwise be.

This first ran on Dean Baker’s Beat the Press blog.

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