January Non-Farm Payrolls in the US record 130,000, far exceeding expectations; market reduces bets on Federal Reserve interest rate cuts

Eastern Time Wednesday, data released by the U.S. Bureau of Labor Statistics showed that U.S. non-farm employment added 130,000 jobs in January, significantly exceeding market expectations, marking a transitional end to a year of weak job growth and injecting stronger momentum into the new year. This somewhat alleviated concerns about a slowdown in the labor market and supported the Federal Reserve’s policy path to keep interest rates unchanged.

The specific data showed that, after seasonal adjustment, U.S. non-farm employment increased by 130,000 jobs in January, far surpassing the market expectation of 55,000, with the previous (December) figure revised slightly downward to 48,000.

The U.S. unemployment rate in January was 4.3%, slightly below the market expectation of 4.4%, hitting a new low since August 2025.

Following the data release, spot gold plunged nearly $40, the dollar index surged 50 points, and non-dollar currencies generally tumbled. U.S. Treasury yields also rose significantly.

According to CME rate observation tools: the probability of the Federal Reserve cutting interest rates by 25 basis points by March is 6.0% (before release was 21.7%), while the probability of holding rates steady is 94.0% (before release was 78.3%).

Overall, the report’s data still indicate that the labor market is in a “low growth mode,” but layoffs have not significantly expanded, showing only sporadic increases.

In addition to the monthly data, the U.S. Bureau of Labor Statistics also released final benchmark revision data up to the year before March 2025. After seasonal adjustment, the total non-farm employment over the 12 months ending March 2025 was revised downward by 898,000 jobs, slightly less than the initial estimate of 911,000 in early September last year, but generally in line with Wall Street expectations.

Previously, market expectations for this report were cautious due to recent data showing slowing private sector employment growth, corporate layoffs, and declining job openings. Policy makers, including White House officials like National Economic Council Director Kevin Hasset, have also publicly cooled market expectations.

At the most recent Federal Reserve meeting at the end of January, the decision was made to keep interest rates steady after three consecutive rate cuts. Fed Chair Jerome Powell stated that the economy is growing more strongly and that there are initial signs of stabilization in the labor market. Inflation data for January will be released this Friday.

Over the past few months, the U.S. employment market has shown a “frozen” state: companies have not engaged in large-scale layoffs but have generally slowed new hiring. This pattern makes it harder for recent graduates to enter the workforce and causes many unemployed individuals to face prolonged and minimally effective job searches.

However, some notable layoffs have recently occurred. To digest overexpansion during the pandemic, Amazon and UPS announced large-scale layoffs last month.

Corporate hiring intentions are constrained by multiple factors. Rising costs and uncertainties surrounding frequent adjustments to Trump-era tariffs have made companies cautious about adding new staff. Some firms are evaluating whether artificial intelligence can take on more responsibilities, leading to a temporary halt in expanding their workforce. Meanwhile, the White House’s efforts to deport illegal immigrants have also caused labor shortages in certain industries.

On the other hand, in the current employment environment, the phenomenon of employees changing jobs for better opportunities has significantly decreased. This decline in labor mobility objectively reduces the space for new hiring.

Data as of December last year shows that most new jobs were concentrated in healthcare and social assistance, sectors with clear “counter-cyclical” characteristics—demand for related services remains relatively stable regardless of economic conditions.

Meanwhile, other industries have experienced layoffs. The Trump administration’s efforts to cut federal spending through layoffs and voluntary buyouts have reduced the federal government workforce. Manufacturing also continues to see job losses.

This week’s release of the non-farm employment report was delayed due to a brief partial government shutdown. Last fall’s longer government shutdown caused greater disruptions to data releases, making it harder for the public to accurately gauge the true strength of the labor market.

Economists note that the large-scale tax cuts and investment incentives included in the tax and spending bill passed last summer may boost corporate hiring in 2026, although inflation trends and tariff policy uncertainties will remain challenges.

(Source: Cailian Press)