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US economy creates 143,000 jobs in January

Decline in unemployment rate bolsters Fed case for slow pace of interest rate cuts

A delivery worker in New York. The US economy created 143,000 jobs in January, falling short of forecasts, but a drop in the unemployment rate and robust gains in earnings underscored the strength of America’s labour market. Photograph: Angus Mordant/Bloomberg
A delivery worker in New York. The US economy created 143,000 jobs in January, falling short of forecasts, but a drop in the unemployment rate and robust gains in earnings underscored the strength of America’s labour market. Photograph: Angus Mordant/Bloomberg
Claire Jones and Harriet Clarfelt
Fri Feb 07 2025 - 15:46

The US economy created 143,000 jobs in January, falling short of forecasts, but a drop in the unemployment rate and robust gains in earnings underscored the strength of America’s labour market. While January’s figure undershot expectations in a Reuters poll of 170,000, the Bureau of Labor Statistics also revised up the bumper figure for December, from 256,000 to 307,000.

Economists and traders highlighted a decline in the unemployment rate to 4 per cent in January, down from 4.1 per cent the previous month, which they said bolstered the Federal Reserve’s case to proceed slowly with interest rate cuts.

Friday’s jobs data came just over a week after the Fed kept rates on hold at 4.25 to 4.5 per cent, despite pressure from US President Donald Trump to lower borrowing costs.

Diane Swonk, chief economist at KPMG US, said the fall in unemployment – and increased participation in the labour market – provided “more reason for the Fed to feel comfortable” in its decision to slow the pace of rate cuts this year.

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Average hourly earnings also increased 4.1 per cent over the past 12 months, which economists took as a sign of the persistent health of the US labour market.

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Markets expect the next Fed rate cut to arrive by July, with a 60 per cent chance of another by the end of the year, down from 70 per cent before the jobs report.

“When we step back and look at the trends, this is still pointing to a very healthy labour market,” said Sarah House, senior economist at Wells Fargo. “This keeps the Fed on their bias to hold for the foreseeable future.”

The two-year Treasury yield, which tracks interest rate expectations and moves inversely to price, rose 0.04 percentage points to 4.25 per cent, while the 10-year yield added 0.04 percentage points to 4.48 per cent.

Stocks edged higher in early trading in Wall Street, with the S&P 500 up 0.1 per cent and the tech-heavy Nasdaq Composite adding 0.3 per cent. - Copyright The Financial Times Limited 2025

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