U.S. Labor Market Rebounds in January 2026 with 130,000 New Jobs; Unemployment Dips to 4.3%
130,000 New Jobs; Unemployment Dips to 4.3%
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Photo: worksheetshq.com |
By Sanju Sapkota | February 12, 2026
WASHINGTON — The U.S. labor market began 2026 with a surprising surge in momentum, defying conservative analyst estimates and signaling a potential shift away from the stagnant hiring environment of the previous year.
According to the latest data released by the Bureau of Labor Statistics (BLS) on Wednesday, total nonfarm payrolls increased by 130,000 in January. This figure significantly outperformed the Dow Jones consensus estimate of 55,000 and marked the strongest single month of job creation since late 2024.
The national unemployment rate edged downward to 4.3%, falling slightly from 4.4% in December. This decline, paired with the robust payroll additions, provided a much-needed boost to market sentiment, though it has simultaneously tempered expectations for aggressive interest rate cuts from the Federal Reserve in the first half of the year.
Sector Breakdown: Healthcare and Construction Lead the Charge
Hiring in January was not uniform across all sectors, with growth concentrated in a few key industries:
Healthcare & Social Assistance: The primary driver of growth, adding a combined 124,000 positions. Ambulatory services and hospital staffing accounted for the bulk of these gains.
Construction: Added 33,000 jobs, a notable recovery for a sector that remained largely flat throughout 2025.
Public Sector: Conversely, federal government payrolls continued their downward trend, shedding 34,000 positions as administrative downsizing efforts persist.
Finance: Financial activities saw a decline of 22,000 jobs, reflecting ongoing consolidation within the banking and insurance industries.
A Rough 2025 in Rearview
The January report also included significant annual revisions that shed light on a difficult 2025. The BLS adjusted the previous year’s data, revealing that job growth was much weaker than initially reported. Total new jobs for 2025 were revised down to just 181,000—the lowest annual gain since the post-pandemic recovery began.
Wages and the Fed’s Next Move
Average hourly earnings rose by 0.4% in January, bringing the year-over-year wage growth to 3.7%. While this is a positive sign for consumer purchasing power, it gives Federal Reserve officials room to remain cautious.
Following the report, Treasury yields rose as traders pushed back the timeline for the next potential interest rate cut. Federal Reserve Chair Jerome Powell had recently hinted at a "holding pattern," and today’s data appears to validate that stance.
Sanju’s Take: January’s numbers suggest that while the 'hiring recession' of 2025 is behind us, the economy is transitioning into a more specialized labor market. For job seekers, the opportunities are currently concentrated in healthcare and skilled trades, while white-collar sectors like finance and government continue to trim fat.
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