US employers added just 143,000 jobs last month, jobless rate slips to 4% to start the year

By PAUL WISEMAN, Associated Press Economics Writer

WASHINGTON (AP) — U.S. employers added just 143,000 jobs last month, but the jobless rate slipped to 4% to start 2025 and the government revised November and December payrolls higher.

The first job report of Donald Trump’s second presidency suggested that he inherited a labor market that is solid but unspectacular. Economists had expected about 170,000 new jobs in January.

It’s a downshift from 2024 which averaged 186,000 new jobs a month, including a surge of 256,000 in December. The unemployment rate is expected to remain low at 4.1%.

The future is cloudier.

A federal judge on Thursday temporarily blocked President Donald Trump’s plan to push out federal workers by offering them financial incentives, yet a federal hiring freeze that Trump imposed Jan. 20 is a “negative for employment growth,’’ Bradley Saunders, an economist at Capital Economics, wrote in a commentary last week. The freeze came after the Labor Department collected the January jobs numbers, so any impact would be revealed in upcoming employment data.

Likewise, a cold snap that probably increased seasonal layoffs in the Midwest and Northeast occurred late in January and won’t register in government jobs data until the February numbers come out, Saunders wrote.

Economists are also worried about Trump’s threat to wage a trade war against other countries. He’s already imposed a 10% tax on imports from China.

Canada and Mexico – America’s two largest trading partners — remain in his crosshairs though he gave them a 30-day reprieve from the 25% tariffs he was planning to sock them with on Tuesday, allowing time for negotiations. Trump says that America’s two neighbors and allies haven’t done enough to stem the flow of undocumented immigrants and fentanyl into the United States. Trump is also itching to slap tariffs on the European Union; pointing to America’s deficit in the trade of goods with the EU, which came to $236 billion last year, he says that Europe treats U.S. exporters unfairly.

The tariffs, which are paid by U.S. importers who generally try to pass along the cost to customers, could rekindle inflation – which has fallen from the four-decade high it reached in mid-2022 but is still stuck above the Fed’s 2% target. If the tariffs push prices higher, the Fed may cancel or postpone the two interest-rate cuts it had forecast for this year. And that would be bad for economic growth and job creation.

The job market has already cooled from the red-hot days of 2021-2023. American payrolls increased by 2.2 million last year, down from 3 million in 2023, 4.5 million in 2022 and a record 7.2 million in 2021 as the economy roared back from COVID-19 lockdowns. The Labor Department also reports that employers are posting fewer jobs. Monthly job openings have tumbled from a record 12.2 million in March 2022, to 7.6 million in December – still a decent number by historical standards.

As the labor market cools, American workers are losing confidence in their ability to find better pay or working conditions by changing jobs. The number of people quitting has fallen from a record 4.5 million near the height of the hiring boom in April 2022, to December’s 3.2 million, which is below pre-pandemic levels.

Still, layoffs remain below pre-pandemic levels, creating an unusual situation: If you are employed, you probably enjoy job security. If you’re looking for one, things have gotten tougher.

The Labor Department is also expected to report annually released revisions Friday that will show job creation from April 2023 through March 2024 wasn’t as strong as originally reported.

A preliminary version of the revisions, released in August, showed that 818,000 fewer jobs were created over those 12 months – lowering average monthly hiring during that span from 242,000 to 174,000. Because they are not final, the August estimates have not yet been added to the official government payroll numbers. The revisions out Friday will become official and part of the historic data.