U.S. Economy Exceeds Expectations, Adds 130,000 Jobs in January 2026

January Job Growth Surpasses Forecasts

The U.S. economy began 2026 with stronger-than-anticipated job growth, as American employers added 130,000 nonfarm payroll jobs in January. This figure, reported by the U.S. Labor Department's Bureau of Labor Statistics (BLS), considerably exceeded the expectations of economists, who had generally forecast an increase of around 70,000 jobs for the month. The unemployment rate also saw a slight improvement, falling to 4.3% from the previous month, against expectations of 4.4%.

Key Sectors Driving Employment Gains

Job creation in January was concentrated across several key sectors, indicating targeted areas of expansion within the economy. The health care sector led the gains, adding 82,000 jobs, with notable increases in ambulatory health care services, hospitals, and nursing and residential care facilities. Following closely, social assistance saw an increase of 42,000 jobs, primarily in individual and family services. The construction industry also contributed positively, adding 33,000 jobs, largely driven by nonresidential specialty trade contractors. Additionally, professional and business services recorded an increase of 34,000 jobs.

Sectoral Declines and Wage Trends

Despite overall job growth, some sectors experienced declines. The federal government saw a reduction of 34,000 jobs, attributed to federal employees who accepted deferred resignation offers in 2025 coming off payrolls. The financial activities sector also shed 22,000 jobs, with insurance carriers and related activities accounting for a significant portion of these losses. In terms of compensation, average hourly earnings growth remained constant at 3.7% year-over-year, while average weekly earnings for private sector employees rose by 0.7% in January.

Revisions to 2025 Data and Economic Outlook

The January report arrived alongside significant downward revisions to 2025 job growth figures. The total number of jobs added in 2025 was revised down from an initial estimate of 584,000 to just 181,000 jobs for the entire year, marking a considerably weaker performance than previously understood. This context makes January 2026's strong showing particularly noteworthy, suggesting a potential shift from the 'low hire, low fire' conditions that characterized much of the previous year. However, some economists caution that the concentration of job growth in a few sectors warrants continued monitoring. The robust report has also been noted to diminish the immediate case for interest rate cuts.