Nightmarish labor market finally shows signs of letting up-and 'vindication' for Jerome Powell | Fortune
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Nightmarish labor market finally shows signs of letting up-and 'vindication' for Jerome Powell | Fortune
"If 2025 was the year of the labor market's long winter, January provided the first thaw-along with a bit of a victory lap for outgoing Federal Reserve Chair Jerome Powell. U.S. employers added 130,000 jobs in January, roughly double economists' expectations and the strongest headline print in months, offering an unexpectedly upbeat start to a year that made Maria Bartiromo exclaim "Wow," on Fox Business. Health care alone added 82,000 jobs in January, while social assistance contributed another 42,000."
"The unemployment rate ticked down to 4.3%, and wage growth held steady. However, for markets that had been eager for near-term Federal Reserve rate cuts, the report landed as an unwelcome surprise. "The data is not aligned with any near-term rate cuts," RSM chief economist Joseph Brusuelas wrote on X shortly after the release. The beat stood out in part because expectations had been so low after a stalling labor market grew more dire as the year dragged on."
U.S. payrolls increased by 130,000 in January, about double expectations and the strongest monthly headline in months. Health care added 82,000 jobs, social assistance 42,000, and construction 33,000, while federal government employment fell by 34,000 and financial activities lost 22,000. Manufacturing showed unexpected strength, suggesting hiring may be stabilizing beyond defensive sectors. The unemployment rate declined to 4.3% and wage growth remained steady. Some market participants viewed the report as inconsistent with near-term Federal Reserve rate cuts. Bullish forecasters cited reindustrialization and AI-driven capital expenditure as foundations for stronger economic momentum.
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