The US labor market began 2026 with stronger-than-expected momentum, as employers added 130,000 jobs in January and the unemployment rate declined to 4.3%, according to newly released data from the Bureau of Labor Statistics. Economists had forecast a gain of approximately 75,000 jobs and a steady unemployment rate of 4.4%, making the latest figures a notable upside surprise.
The report marks the strongest monthly employment growth since December 2024 and has sparked cautious optimism that the labor market may be stabilizing after a prolonged period of weak hiring. However, significant downward revisions to prior data reveal that last year’s employment gains were substantially weaker than initially reported, complicating the outlook for sustained recovery.
Stronger Start to 2026
January’s employment figures suggest that hiring activity improved at the start of the year. Daniel Zhao, chief economist at Glassdoor, noted that hiring “came out of the gate stronger than expected,” indicating that the labor market may be regaining its footing after a sluggish stretch.
Despite the positive headline numbers, analysts caution that seasonal adjustments and weather-related factors often influence January data. While the unemployment rate’s decline to 4.3% reflects tightening labor conditions, economists remain wary of declaring a full reacceleration in hiring trends.
Health Care Drives Job Creation
A closer look at the data reveals that job growth was heavily concentrated in one sector. Health care and social assistance accounted for 123,500 of the 130,000 jobs added in January. The sector continues to benefit from demographic shifts, particularly an aging population that sustains demand for medical and support services.
In contrast, many other industries have experienced what some economists describe as a “hiring recession,” characterized by subdued recruitment and limited expansion. This uneven distribution of job gains underscores concerns about the lack of broad-based growth across the economy.
Major Downward Revisions to 2025 Data
The latest report also included substantial revisions to previously reported employment figures. Following annual benchmarking and methodological updates, the Bureau of Labor Statistics revised 2025 job growth sharply lower. Instead of 584,000 jobs added last year, the revised total stands at just 181,000.
On average, that equates to approximately 15,000 jobs per month in 2025, significantly below the earlier estimate of 50,000 per month. Additionally, the annual benchmark revision revealed that 898,000 fewer jobs were created between April 2024 and March 2025 than originally reported. On a not seasonally adjusted basis, the downward revision was 862,000, marking the second-largest negative adjustment on record since 1979.
Understanding the Revisions
January employment reports traditionally incorporate comprehensive revisions. The annual benchmark aligns monthly payroll survey data with the Quarterly Census of Employment and Wages, which relies on state unemployment insurance tax records. While more complete, this data is significantly lagged.
Large revisions often occur when economic conditions shift rapidly, making it difficult for survey-based models to capture real-time changes accurately. Contributing factors may include declining survey response rates, challenges in measuring employment at new and closed businesses, and discrepancies involving contract, informal, or immigrant workers.
Conclusion
The January employment report signals a stronger-than-anticipated start to 2026, driven largely by gains in health care. However, substantial downward revisions to 2025 data highlight underlying fragility in the labor market. While signs of stabilization are emerging, sustained and broad-based job growth will be essential to confirm a durable recovery.