Strong job gains in January mask statistical noise and uneven growth

If you’re looking for a sign of hope from the labor market, don’t get too excited about January’s job gains.

The newest jobs report from the Bureau of Labor Statistics showed strong job gains for last month, following significant cooling in 2025. But experts warn that some statistical wonkiness, and employment growth concentration in just a few sectors, is likely impacting the January jobs data. Let’s take a closer look.

Diving into the data. Employers added another 130,000 jobs in January, beating some pretty dour forecasts from economists. The unemployment rate edged down slightly to 4.3%, from 4.4% in December.

On the surface, experts who spoke to HR Brew said those top-line numbers were a pleasant surprise following a cooling in the labor market. January’s strong job gains could be a sign of stabilization, they said.

“This is an indication that the labor market may be stabilizing. There’s some normalization happening, there’s some thawing happening,” said Raj Namboothiry, SVP at Manpower US.

But new benchmark revisions likely have created some statistical noise with January’s initial employment estimates. Each February, the BLS posts revisions to its jobs data, based on new population estimates from the Census Bureau. While January jobs data normally incorporates these updates from the Census Bureau, that was delayed by a month due to the government shutdown in the fall of 2025. Instead, last month’s estimates are based on projections from January 2025, which at the time factored in population growth from immigration. (Spoiler alert: We’ve since seen population growth slow due to less immigration.)

As a result, employers will want to take January’s employment growth with a very tiny grain of salt.

“If we focus on the revisions, we did have a huge benchmark revision with January. What’s not to say that this number is going to be revised down drastically as well?” said Elizabeth Crofoot, principal economist at Lightcast. “So I’m not putting all my eggs in this basket. Like, yes, it looks great, but I think that there is some sanity checking that we have to do.”

New estimates were released for 2025, though. For the year ending in March 2025, total employment was revised down by 898,000, slightly less than the 911,000 fewer jobs that the BLS originally estimated for that period. For all of 2025, job growth was revised from 584,000 to just 181,000 for the entire year. For all of 2025, employers added an average of just 15,000 jobs per month. By comparison, in 2024, employers added roughly 121,500 jobs per month on average. This sharp decline reflects employers’ hesitations to hire amid challenges including tariffs and immigration enforcement.

“We did see some cooling. We saw that in the hiring, we saw that in conversations with our large employers, that there was this cautious optimism, wait and watch mode, which was pretty much the theme around 2025,” said Namboothiry. “The adjustment down does not surprise me. It is in line with what we saw in the market, what we saw and heard from our clients as

well.”

Moreover, even taking the 130,000 job gains at face value, the vast majority of growth was in healthcare and social assistance, which added 123,500 jobs, 82,000 of which were in healthcare. For every other sector, just 7,000 jobs were added in January.

“It’s such an uneven job market, this is not a solid foundation for growth. It signals that we again have a lot of cracks in the labor market,” said Crofoot. Federal employment, meanwhile, declined by 34,000 in January, and is down 327,000 from its peak in October 2024. Other notable sectors that lost jobs include financial activities which fell by 22,000, information which fell by 12,000, and transportation and warehousing which fell by 11,000.

“If you’re in any of these industries, you’re hurting. You’re not feeling these great job gains, and you’re not seeing the job opportunities. You’re not feeling like unemployment is going down,” Crofoot added.

Zoom out. Employers will have to wait and see if January’s job gains are a sure sign of stabilization or possible growth, or just a fluke.

“We have to wait until February and really the first quarter of the year, to kind of see if this is a trend where people are actually coming back to the labor market,” Crofoot said, adding that Wednesday’s report “sort of defies a lot of the demographic patterns that we’ve been seeing that immigration is down, retirements are up, young people are having a hard time finding jobs.”

For employers that are hiring, there will be a continued emphasis on taking a slower, more intentional and methodical approach to hiring, versus trying to fill roles quickly, Namboothiry said. It’ll be important to signal that to candidates, he noted.

“I keep telling my clients this means you’re sending signals, not a false optimism, but you’re sending signals around stability, about your hiring intent, about hiring with intention and purpose,” he said. “I think that is important for HR leaders to message it that way.”