US Unemployment Falls to 4.3%

The U.S. labor market showed renewed momentum in January, with job growth accelerating and the unemployment rate edging down to 4.3%, offering fresh evidence of stability that could allow the Federal Reserve to keep interest rates on hold as policymakers continue monitoring inflation.

According to data released Wednesday by the Labor Department’s Bureau of Labor Statistics (BLS), nonfarm payrolls increased by 130,000 jobs last month. The figure exceeded economists’ expectations of a 70,000-job gain and marked a sharp rebound from December’s revised total of 48,000 jobs.

Forecasts had varied widely, ranging from a loss of 10,000 jobs to an increase of 135,000, reflecting uncertainty about the strength of the labor market heading into 2026.

The unemployment rate declined from 4.4% in December to 4.3%, signaling modest improvement in labor conditions despite ongoing economic and policy headwinds.

Part of January’s stronger-than-expected performance appears linked to seasonal dynamics. Sectors sensitive to holiday demand, such as retail and delivery services, hired fewer temporary workers than usual during the year-end shopping season. As a result, the typical wave of January layoffs was less pronounced.

January is traditionally the month with the largest seasonal job cuts following the holiday period. Lower seasonal hiring in late 2025 likely meant fewer layoffs in early 2026, artificially boosting net job gains.

Starting with the January report, the BLS updated its “birth-death” model, used to estimate job creation and losses from business openings and closures, by incorporating more recent sample data on a monthly basis. Economists estimate that this technical adjustment could reduce payroll growth estimates by up to 50,000 jobs compared to recent months, potentially affecting headline figures going forward.