Total nonfarm payrolls increased by 143,000 in January, while the unemployment rate ticked down slightly to 4%, the U.S. Bureau of Labor Statistics reported on February 7. Job gains were in the healthcare, retail trade and social assistance sectors, while job losses were seen in the mining, quarrying and oil and gas extraction industries.
While the unemployment rate had been relatively steady for seven months, wavering between 4.2% and 4.1%, the raw number of unemployed in the U.S.—at 6.8 million—ticked down slightly from 6.9 million last month.
The report also showed an average hourly earnings gain of 4.1% over the prior 12 months.
Bright MLS Chief Economist Lisa Sturtevant offered a partial recap and additional commentary on what today’s jobs report might mean for the housing market moving forward:
“The labor market is on solid footing to begin 2025,” she said. “While there have been some signs of cooling labor market conditions, such as fewer job openings, today’s report indicates that the U.S. economy remained resilient to start the year. In January, the economy added 143,000 jobs, which was slightly below expectations. Job growth may have come in lower than predicted because of the impacts of winter storms in the East and South, as well as the wildfires in Los Angeles…(w)ages continue to rise faster than inflation.
“Although today’s job report is generally positive, it actually offers up a mixed bag for the housing market. With more jobs being added in relatively high-wage sectors, and overall earnings on the rise, prospective homebuyers will feel more confident heading into the spring housing market. However, with employers still adding jobs at a healthy pace and inflation above the Fed’s 2% target, the central bank is likely to keep interest rates unchanged at its meeting in March, which means mortgage rates could remain in the high 6% range heading into spring.”
MBA SVP and Chief Economist Mike Fratantoni also clarified that there were a few reasons to pump the brakes, including a rate of job additions that likely cannot be sustained in the long term.
“At first glance, on net, these data indicate a job market that remains reasonably strong. Job growth over the past three months has averaged a gain of 237,000, likely above what can be sustained this year.
“However, there are several factors working to cloud this picture. First, there were substantial revisions to prior payroll data, with job growth from the most recent months revised higher, but the annual benchmark process showing slower job growth for 2024. Second, the household survey was adjusted in January to recognize the impact of substantial international immigration in recent years, adding 2.9 million people to the population count as of January, which is one factor pushing the unemployment rate down. Finally, the wildfires in Los Angeles and severe winter weather events across the country, while not clearly impacting the results according to BLS, are another source of uncertainty.
“With all the caveats, these job market data are likely to keep the Fed on hold with respect to any further rate cuts. With inflation still above target, and no appreciable signs of weakening in the job market, MBA’s forecast is that the Fed will make at most one more cut this cycle.”
Realtor.com® Chief Economist Danielle Hale had this to say about the jobs report:
“Existing-home sales closed out 2024 with a strong upswing, but mortgage rates have hovered near 7% since then, putting a question mark on the upcoming spring housing season as pending home sales pulled back in December. Early 2025 housing data from Realtor.com showed healthy seller engagement, but affordability remains a challenge that is acutely felt by younger households who have seen homeownership rates slip. Majorities still say that homeownership is part of the American Dream, but younger households are less likely to do so and also less likely to say that homeownership is achievable for them.
“A healthy labor market that provides younger workers with opportunities is essential, but it isn’t enough on its own to make homeownership achievable. The U.S. has a housing shortage estimated by Realtor.com to be between 2.5 and 7.2 million homes. States that can build more housing and also provide economic opportunity for residents are going to have an edge.”
Among the major worker demographics, the unemployment rates for adult men (3.7%), adult women (3.7%), teenagers (11.8%), whites (3.5%), Blacks (6.2%), Asians (3.7%) and Hispanics (4.8%) all showed little to no change for the month of January.
Those who were considered unemployed in the long-term (those who are jobless for 27 weeks or more) registered 1.4 million people in January, little changed from December. This type of unemployment accounted for 21.1% of the total number of unemployed people nationwide.
For the month of January, the labor force participation rate and employment to population ratio were both unchanged from December, registering 62.6% and 60.1%, respectively (these numbers were calculated after accounting for the annual adjustments to population controls).
The number of people employed part time for economic reasons, at 4.5 million, also changed little in January. These are individuals who would have preferred to work full time but were working part time due to reduction in hours or the inability to find a full-time job.
The number of people not in the labor force who currently want a job, at 5.5 million, again saw little change in January. These were individuals who weren’t tallied in unemployment figures because they were not actively looking for work during the four weeks preceding the survey or were unavailable to take a job at all.
