Investing.com - The U.S. economy added fewer jobs than anticipated in January, pointing to a slowing in labor demand, although analysts noted the figures may be distorted by revisions and extreme weather events during the month.
Nonfarm payrolls came in at 143,000 in January, down from an upwardly-revised level of 307,000 in December, according to data from the Labor Department’s Bureau of Labor Statistics (BLS). Economists had seen the number at 169,000.
Coupled with a similar increase in November’s revised figure, the total revisions between the two months amounted to 100,000 roles.
Meanwhile, the unemployment rate cooled slightly to 4.0%, down from 4.1% in the previous month. The figure was tipped to match December’s pace. Average hourly earnings growth accelerated to 0.5%, faster than expectations that it would equal 0.3% in December.
The BLS flagged that the establishment survey -- which measures nonfarm employment -- had been revised as a result of an annual benchmarking process and an update to seasonal adjustment factors. The household survey for January, a gauge of status of the labor force, was also reflective of fresh population estimates, the BLS said.
Prior to the publication of the report, analysts had said the data could have been distorted by recent devastating wildfires in Los Angeles, along with a spell of cold weather across the U.S. last month. However, the BLS said the events had "no discernable effect" on the report.
Friday’s figures, as well as a raft of separate reports earlier this week, have suggested that the labor market may be easing but is not entering a sudden downturn -- possibly bolstering the case for the Federal Reserve to leave interest rates unchanged until at least June.
At the Fed’s gathering last month, the central bank chose to push pause on a series of rate cuts that began in 2024, citing in part a relatively stable labor market and uncertainty around the economic fallout from new U.S. President Donald Trump’s policy changes. Borrowing costs now stand at a range of 4.25% to 4.5%.
Indeed, Fed Chair Jerome Powell has said that there is "no need" for officials to "be in a hurry" to adjust their policy stance.
"At the end of the day, we don’t think these numbers really change anything. The Fed is probably still quite pleased with where things stand and will stay in ’on hold’ mode as they watch to see how data unfolds and what Trump’s policies will be," analysts at Vital Knowledge said in a note to clients.
Elsewhere, a gauge of consumer sentiment from the University of Michigan unexpectedly fell in February, while one-year inflation expectations moved up to 4.3% from 3.3%, the highest reading since 2023. The survey may indicate that consumers are becoming increasingly concerned that Trump’s policies -- particularly his sweeping tariff plans -- could refuel price growth and dent broader economic activity, analysts at Capital Economics noted.
Rate-sensitive 2-year U.S. Treasury yields and their benchmark 10-year counterparts, which both tend to move inversely to prices, were higher, while stocks on Wall Street erased earlier gains to trade lower.