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What the US Jobs report means for the Fed
Claudia Sahm, Chief Economist at New Century Advisors, reacts to the January jobs report.
US payrolls rose in January by the most in more than a year and the unemployment rate unexpectedly fell, suggesting the labor market continued to stabilize at the start of 2026.
Employers added 130,000 jobs last month and the unemployment rate declined to 4.3%, according to Bureau of Labor Statistics data out Wednesday. That followed revisions to the prior year, which showed a marked slowdown in hiring. Job gains averaged just 15,000 a month last year, down from the initially reported 49,000 pace.
The report suggests the labor market is finding its footing after a year marked by rising unemployment and minimal hiring. While economists expect hiring to remain generally sluggish in 2026, more clarity around the impact of President Donald Trump’s economic policies and lower borrowing costs could encourage some employers to boost headcount.
The January data reinforces Federal Reserve officials’ inclination to keep interest rates on hold for now. Many traders appeared to push out their timeline for the next rate cut to July from June.
In leaving rates unchanged last month, Chair Jerome Powell cited signs of steadying in the job market.
“Coming off of a hiring recession recession in 2025, this is welcome news,” said Heather Long, chief economist at Navy Federal Credit Union. “I think Fed Chair Powell was right — the labor market appears to be stabilizing.”
Trump praised the numbers in a social media post Wednesday and said the US should have the lowest interest rates globally, adding to previous calls for rate reductions. “GREAT JOBS NUMBERS, FAR GREATER THAN EXPECTED!” he wrote.
With the release of each January employment report, BLS benchmarks payrolls to a more accurate but less timely series called the Quarterly Census of Employment and Wages. That data is based on state unemployment insurance tax records and covers most US jobs.
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Published Feb 11, 2026
