January jobs report: Then slower, now faster

The latest jobs numbers are out from the U.S. Bureau of Labor Statistics. What do they mean for job seekers, employers and investors? Here’s a quick take from Glassdoor’s Chief Economist Daniel Zhao.

The January jobs report is a tale of two time periods, revealing with the benefit of hindsight, a much slower 2025 than originally reported, but at the same time, showing a much stronger January than expected. Overall, the updated scoreboard for 2025 shows a job market that was much more sluggish than originally reported. However, the acceleration in job gains in January starts the year with a tinge of optimism.

Key stats

Sharply negative benchmark revisions are in line with expectations

In the December jobs report, the year-end tally of jobs added came in at 584,000. In today’s January jobs report, annual benchmark revisions brought annual job gains for 2025, down to 181,000. Preliminary estimates released in September 2025 had called for a 911,000 downward revision to the March 2025 employment level, which was almost exactly what came about in today’s report (-898,000). While these downward revisions are eye-popping and the largest since 2009 in absolute terms, the accurate preliminary estimate means policymakers won’t be caught off guard. 

The revisions mean 2025 annual job gains were revised down from 548,000 to 181,000, the lowest pace of jobs growth since 2020 when the pandemic was at its height. 2024 total job gains were also revised down from 2,012,000 to 1,459,000, suggesting the job market was much cooler coming into 2025 than initially reported as well.

The annual benchmark revisions are a usual part of the process, aligning more timely but less accurate establishment survey data with less timely but more accurate comprehensive unemployment insurance records for March 2025 employment. The negative revision is large but not unprecedented and points to the difficulty of accurately estimating labor market indicators across the entire economy.

By industry, the largest changes due to the benchmark revisions came for leisure & hospitality (-152,000 revision to March 2025 employment level), professional & business services (-131,000) and retail trade (-127,300).

With updated benchmark revisions, a more accurate picture for the 2025 labor market is crystallizing. In some cases, the narrative has changed: the job market was slowing in 2025 more sharply than expected and was slower in 2024 than initially reported. 

But there are some ways that the story is the same: Health care job gains were largely unaffected by the benchmark revisions, and health care remains the primary driver of job gains, even as we head into 2026.

Unemployment improves

Unemployment fell back to 4.3% from 4.4%. The government shutdown may have contributed to the rise in the unemployment rate in the fall. The unemployment rate has since retreated, falling in December and further in January. Unemployment remains at a healthy level and is not showing signs of deterioration.

Population control updates will come along with the February jobs report in March and will retroactively apply to the January data. The population control updates are especially important as the current population controls assume a significantly higher level of immigration than is actually true under current policy. 

The population control updates usually released in January were delayed due to the fall 2025 government shutdown. The updates will significantly revise levels from the household survey, and it’s possible some rate estimates will be adjusted as well.

More insights

Payroll job gains came in at 130,000 in January, the best month of job gains since December 2024. 2025 was revised significantly downwards, however, resulting in four months of net job losses.

Concentration of jobs growth in health care is even more stark post-revisions. In 2025, payrolls grew 181,000 while health care & social assistance payrolls grew 693,200, implying all other industries lost 512,200 jobs. January 2026 is continuing that trend: health care & social assistance added 123,500 jobs while all other industries added just 6,500 jobs.

Manufacturing broke its 13-month streak of consecutive monthly job losses in January, but benchmark revisions reveal 2024 and 2025 were much weaker than originally reported for manufacturing. In 2024, manufacturing lost 179,000 compared to the 105,000 job losses originally reported. In 2025, annual job gains in manufacturing were revised down to -108,000 from -68,000.

Federal job losses jumped in January, with 34,000 federal workers falling off of payrolls. The DOGE deferred resignation program's impact was mostly seen in the October 2025 report, but the program also allowed some retirements to take effect through the end of 2025, which may help explain the bump in the January report. It remains to be seen if federal job losses will continue in 2026 now that the deferred resignation program is over.

Average hourly earnings grew 3.7% year-over-year in January 2026, flat from December. There is no sign of pickup in wage growth, suggesting labor demand is not suddenly exceeding labor supply. But it is worth watching to see if wage growth picks up if jobs growth does continue to remain as strong as it was in January 2026.

Two other very encouraging data points from the household survey: Prime-age labor force participation is at its highest level at 2001. Prime-age employment-population ratio ties its recent peak, which was also the highest level since 2001.

The share of workers part-time for economic reasons also fell, continuing its decline after spiking in November. It's a good sign that fewer workers are being forced to work part-time when they want full-time hours.

Black unemployment has fallen sharply in the last 2 months from 8.2% in Nov to 7.2% in Jan. It is unclear whether the November spike was driven by knock-on effects from the government shutdown. Unemployment rates for specific racial/ethnic groups are also very volatile month-to-month, which could explain the November jump or the January drop.