Job growth in the US picked up last month, gathering pace after the weakest year for new jobs since the Covid-19 pandemic.

Employers added a greater-than-expected 130,000 jobs in January, helping nudge the unemployment rate lower to 4.3%, the Labor Department said.

The figures could help ease fears about the health of the job market after last year’s sharp slowdown, as firms wrestled with changes including major cuts to government spending, tariff uncertainty and an immigration crackdown.

The US added just 181,000 jobs in 2025, according to the latest data, even weaker than previously reported.

The White House has pushed back against concerns, arguing the slowdown in population growth as a result of its immigration policies has reduced the number of jobs the US needs to create each month – a theory supported by many economists.

At the same time, however, President Donald Trump has been leaning on the US central bank to cut interest rates to boost the economy.

Analysts cautioned that January’s job gains – nearly double what many had predicted – might look more robust than the reality due to quirks in the data.

Other government surveys, including those tracking job openings, have pointed to weaknesses in the market.

But the strength of January’s figures is still expected to relieve some of the pressure on the Federal Reserve to cut interest rates.

“Today’s data shows an acceleration in employment that was strong enough to drive unemployment lower – vindication for [Fed Chair Jerome] Powell’s holding pattern,” said Ellen Zentner, chief economic strategist for Morgan Stanley Wealth Management.

Wednesday’s report showed the unemployment rate falling to 4.3% in January, from 4.4% in December, as more people entered the workforce and found positions.

Meanwhile, pay continued to climb. According to the report, average hourly earnings rose 3.7% over the last year.

Job gains last month were powered by the healthcare and construction sectors, while the federal government and financial sector shed roles.

Nancy Vanden Houten, lead economist at Oxford Economics, said the report “overstates” the emerging strength of the labour market, noting that the bulk of the job gains were concentrated in just a few sectors.

Recent job reports have been subject to significant revisions. The Labor Department said the US had 17,000 fewer jobs in November and December than previously estimated.

Wednesday’s report also included wider revisions to last year’s data, which are made as the government receives more detailed tax and employment information from businesses.

The updated estimates found the economy added 862,000 fewer jobs in 2025 than initially reported. That was in line with expectations. (BBC)

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