U.S. employment growth lost steam in January, with job growth coming in well below expectations and marking a significant slowdown from the previous month.

Nonfarm payrolls rose by 143,000 in January 2025, marking a sharp slowdown from the upwardly revised 307,000 in December and missing economist expectations of 170,000, as tracked by TradingEconomics.

The softer-than-expected data hints at a gradual cooling in hiring momentum. The official jobs report also reveals a weaker-than-expected unemployment rate and hotter-than-expected wage growth, indicating mixed signals about the health of the U.S. labor market.

“In January, job gains occurred in health care, retail trade, and social assistance. Employment declined in the mining, quarrying, and oil and gas extraction industry,” the Bureau of Labor Statistics stated.

November’s total nonfarm payroll employment was revised higher by 49,000, increasing from 212,000 to 261,000, while December’s figure rose by 51,000, from 256,000 to 307,000.

Despite the weaker hiring pace, the unemployment rate surprisingly inched down from 4.1% to 4% in January, beating expectations of a stable reading.

Average hourly earnings, a key measure of wage inflation, spiked 0.5% month-over-month, topping expectations of 0.3% and marking the highest increase since January 2024. On an annual basis, wages increased 4.1%, up from 3.9% previously, and beating estimates of 3.8%.

Beyond the headline numbers, Friday’s job market report also included the annual benchmark revision to the establishment survey and updated population controls in the household survey.

The total nonfarm employment gain for the year ending March 2024 was revised down from 2,900,000 to 2,346,000.

Market Reaction

Financial markets showed little reactions to the jobs report, with U.S. equity futures holding flat as investors reassessed the Fed's policy outlook.

The U.S. dollar index, tracked by the Invesco DB USD Index Bullish Fund ETF , inched up by 0.2%, driving by rising Treasury yields.

The yield on the 10-year Treasury note was up by 5 basis points to 4.49% by 9:00 a.m. ET Friday. Yields on both longer- and shorter-dated maturities rose in a similar fashion. The iShares 20+ Year Treasury Bond ETF was 0.6% lower in the premarket trading.

Gold, which is tracked by the SPDR Gold Trust , held steady at $2,865 per ounce, hovering at record highs.

Sector-wise, communication services outperformed, up 0.5%, while consumer discretionary stocks lagged, down 0.6%

On Thursday, the SPDR S&P 500 ETF Trust ( SPY ) closed 0.4% higher.

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