Job Growth Starts 2026 on a Stronger Note; Fratantoni Weighs In

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The U.S. economy added 130,000 nonfarm jobs in January, exceeding consensus expectations.

MBA Senior Vice President and Chief Economist Mike Fratantoni said the U.S. Bureau of Labor Statistics’ report on employment conditions showed “modest improvement” relative to prior months. “However, the job gains continue to be focused in just a few sectors, matching the uneven pace of economic growth we are seeing in many data releases. Overall, this report provides support for FOMC officials who have voted to keep rates steady for the time being.”

The unemployment rate declined to 4.3% in January, down from 4.4% in December. There was a decline in the number of long-term unemployed workers, as well as in the U6 measure of underemployment. Job growth averaged only 15,000 per month in 2025 following downward revisions to November and December numbers.

“As a result of the benchmark revisions that were released with this month’s results, total nonfarm employment in December 2025 was more than 1 million jobs below the prior estimate,” Fratantoni noted.

“January started off 2026 on a stronger note with a gain of 130,000 on a seasonally adjusted basis. There were solid gains in health care, social assistance, and non-residential construction jobs. Federal government employment has declined by 10.9% since October 2024. Wage growth slowed a bit to 3.7% from 3.8% in December.”

Wells Fargo Economics, Charlotte, called the employment report broadly encouraging. “We have been saying for some time now that the window for the FOMC to cut rates is closing, and today’s data suggest another rate cut under Chair Powell is increasingly unlikely,” the firm said. “If cuts are coming this year, it appears that it will be up to a future Chair Warsh to win over the hawks on the Committee and deliver before year-end.”

“From a housing market perspective, a stronger job market should improve consumer confidence and support demand this spring,” Fratantoni concluded.