Well, the adventure that is the monthly jobs report continues. The tell to how bad the data are, is found in the constant monthly and annual revisions, which may be small in the scope of the total number of employed persons but seem substantial in terms of monthy changes. This month’s report was particularly interesting because we are stealing with shutdown issues and the regular annual “benchmark” revisions occur in January. Seasonal adjustments are also substantial in January. The bizarre company birth/dead model was revised; that model essentially makes up how many jobs were created by new companies and lost from companies going out of business. And I believe there is an enormous unmeasured impact from the removal of illegal immigrants.
The overall number of jobs rose 137,000 in January, with 172,000 in the private sector, with government employment actually going down. Those are very positive trends. The biggest sectors with job growth were health care, social services, construction and professional and business services. Financial services and insurance experienced a decline in workers; this may be an AI impact. I don’t view health care and social services as positives, as they are largely government funded. Manufacturing jobs continue to not show any significant growth.
The various revisions to prior numbers, going back several years, resulted in over a million downward estimate in the number of people employed by the end of December 2025 and according to these revisions, there was little employment growth in 2025. But remember that a lot of illegal immigrants were removed from jobs. Some of the revisions are due to checks against state unemployment compensation data. Not clear to me why an effort isn’t made to speed up the availability of those data and use them in monthly reports, instead of the employer and household surveys with low response rates.
In the midst of all these numbers, the unemployment rate actually went down, which is particularly noteworthy because labor force participation rate ticked up slightly, which is very positive. Hourly wages are continuing to bump up, at a right faster than inflation, which is also a positive. Hours worked were also higher. And most of the new jobs were full-time, not part-time. I don’t know what the state of the labor is or which way it is trending, and I am not sure anyone else does either. Friday will bring the CPI update. In a good world, jobs will be trending up and inflation trending down. We need better data to feel comfortable that this is where we are. (BLS Release)
