Job Report shows an employment slim down as companies are acting like ‘they are in a recession’

Cnn
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The US economy started 2025 by adding 143,000 jobs in January, fewer than expected; But unemployment dipped to 4%, according to data released Friday by the Bureau of Labor Statistics.

Economists projected that unemployment would remain at 4.1%and 170,000 jobs would be added, according to Factset stimates.

Friday’s report – which also contained some significant data adjustments that happen at the beginning of each year – also gave more clarity on the recent labor market trends, indicating that job growth last year was weaker than previously estimated.

The latest benchmark revision – an annual process that squares estimates – showed that there were 589,000 fewer jobs added to the economy in 2024 (more about it below).

Accounting for the audits, there was just shy over 2 million jobs added last year, corresponding to approx. 166,000 jobs per Month – a pace that is practically equivalent to the 165,000 average monthly winnings seen in 2019.

“The basis of the labor market remains incredibly robust,” wrote Cory Stahle, an economist at the actual employment laboratory, in a statement Friday. “Revisions of the past year’s data may have rearranged a few rooms in the house, but they did not change the basic structure.”

In the years following the economy-upheaving pandemic, the labor market has subsided, but it has not collapsed. Growth has remained solid enough to fuel consumer costs and put the economy on track for a “soft landing” of reining in inflation without triggering a recession.

It has also been historic. Throughout January, the US economy has published monthly job gains for 49 months and marked the second longest period of employment expansion on the record, according to BLS data, dating back to 1939. (The longest was a 113-month strip from October 2010 to February 2020).

The effects of fires and weather

In January, health care and social assistance continued to go ahead, accounting for almost half of the month’s winnings by placing net growth of 66,000. The retail sector and the government (which spans federal, state and local employment) registered employment growth of 34,300 and 32,000 respectively.

Most major industries added jobs, although some of the winnings were quite modest.

Cold and severe weather, illnesses as well as fires in Los Angeles, which are likely to weigh the month’s job growth, Diane Swonk, chief economist at KPMG, told CNN in an interview.

She noticed shifts in key underlying data points: a loss in leisure and hospitality tasks; increases in people who missed work due to illness or weather; And a decrease in the degree of participation for women in the primary working age.

“We tend to see it under disaster because women with young children no longer have help,” she said.

BLS officials included a notation on fire and weather in Friday’s report, but noticed that there was “no visible effect.”

Economists tell CNN that it is probably just “BLS numbers” to conduct some interruption of the two studies that compose the job report: one of companies and the other of households.

“We think there was probably about a 15,000 job reduction in this report, which we could probably attribute to the fireplace situation,” Josh Hirt, senior American economist at Vanguard, told CNN.

When removing some of the weather and disaster-related noise from January and in recent months, the labor market remains “very healthy” and on a solid foot, Hirt said.

November and December’s job gains were revised higher by a combined 100,000 jobs highlighting a rebound from a hurricane and strike-depressed October.

“There will generally be some typical volatility that we see with monthly salary numbers in general,” he said. “If you look at the last four months, I think you get a pretty clean picture of what’s happening in the labor market. The reality there is on average almost 200,000 jobs. ”

Wage growth remained strong last month and increased 0.5% from December and ran at 4.1% annual rate. The strong monthly gain could reflect a “reset of wages” that typically takes place in January, Hirt said.

The pace of job growth has subsided in the past year. It is expected: Blockbuster Pandemic Recovery could not continue forever; Plus, the Federal Reserve’s inflation -busing high interest rates were designed to limit demand.

But in recent months there has been an approximate trend: the churn needed for a healthy labor market has subsided significantly. Companies do not hire as much, people are not eager to quit and those without a job stay on the sidelines anymore.

“It leaves us in a situation where things can essentially turn quite quickly because you have already got companies hiring as if they are in a recession – even if they do not dismiss people,” Oliver Allen, senior American economist at Pantheon macroeconomics told CNN this week.

And the potential for a significant change has dramatically increased as President Donald Trump has begun to implement sweeping political changes related to trade, immigration, federal employment reductions as well as a breakdown of diversity, justice and inclusion efforts, Michelle Holder, Associate Professor of Economics at John Jay College City University of New York.

These policies could very well turn some of the historical employment gains from women, black workers, Latino workers and other underrepresented Americans, she said.

“Tariffs raise the prices of goods and services, and when it arises, people will buy less and they will use less,” she said. “The data, trends are rather crystal clear during financial downs during periods when (expenses) falls, the costs of sectors fall where black and brown people are well represented.”

The end of the federal workforce would disproportionately affect black workers, she said, noting that they are employed in greater rates in government positions than they are in the private sector.

“The groups that were able to participate in the growth of the economy after we were brought back from the brim after the pandemic, I think these times are over,” she said. “I don’t think the pictures for these groups will be rosis.”

One important thing to keep in mind is that January job reports can be complex due to long-established data sailings that need to be taken into account more current and comprehensive information.

First, they are seasonal adjustment factors. Each January, a significant number of workers lose their jobs when the holiday season is wrapped and that companies make some belt flowing start.

The statistical improvements help smooth out the data to better understand underlying trends. These adjustments expect a certain number of job losses to start the year, so if fewer workers are released than expected, it could result in greater total employment gains (and vice versa).

Secondly, the annual benchmark revision for previous payroll data.

This process, which has been taking place for two decades now, involves uniting the initial employment estimates performed through a series of robust studies of companies with the hard (but limping) data from unemployment insurance treasures required for most companies.

The preliminary benchmark estimate released in August indicated a potential revision of minus 818,000 jobs from April 2023 to March 2024. It was expected to be the biggest audit since 2009.

These big swings occur in significant financial transitions (the great recession back then and the pandemic now). In addition to economic shifts from pandemic time that knocked out models a little out of whip, the recent increase in immigration probably played a role, economists have said.

The monthly establishment survey asks companies how many workers they hire, while the unemployment insurance forms require names and social security number.

“There is nothing surprising about these (revision) data when you look at them in that light,” Ron Hetrick, senior work economist at Lightcast, told CNN in an interview last month.

On Friday, the final benchmark revision of 589,000, a narrowing economist expected due to data seen in the recent quarterly employment and wage reports (which is based on the quarterly UI tax archives).

Third, the inclusion of new population estimates from the census (another annual occurrence) is. These adjustments are included in the household page of the employment report, which looks at workforce properties and where key conditions such as the unemployment rate are generated.